BT shares fall as government pours cold water on takeover bid

Shares in British Telecom are lower today, and its bonds are flat, after telecoms magnate Patrick Drahi announced in a statement this morning that he had increased his stake in the U.K. telecoms giant to 18%.

The announcement drew an immediate response from the U.K. government, which issued a statement saying, “the government is committed to leveling up the country through digital infrastructure and will not hesitate to act if required to protect our critical national telecoms infrastructure,” according to news reports.

This defensive response from the government sent BT’s share price down more than 7%. BT Group this morning issued a statement saying that it “will continue to operate the business in the interest of all shareholders and remains focussed on the successful execution of its strategy and building on recent performance momentum.”

Patrick Drahi, the Franco-Israeli owner of acquisitive French multinational telecoms operator Altice, first purchased a roughly 12% stake in BT in June through U.K.-based holding company Altice UK SARL, leading to speculation of a bid to take the London-listed company private.

BT in November was forced to insert a change-of-control provision into a $1 billion sale of hybrid securities, in a move widely seen as a way of settling bond investors' nerves about a takeover attempt by Drahi, which would inevitably mean the company losing its investment-grade status.

The clause also applied to the group’s outstanding €500 million of 1.874% hybrid notes due 2080, which were issued in 2020 and sank to as low as 93.125 cents on the euro in November. The bonds rallied on the announcement of the provision and are this morning trading in a 97.8/98.6 market, according to Tradeweb prices.