Yahoo Finance BT Says UK Won’t Take Action on Drahi’s Stakebuilding
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French billionaire Patrick Drahi received a nod of approval from the UK government over his late-2021 stakebuilding in BT Group Plc, after authorities weighed implications for national security.
The Secretary of State for Business, Energy and Industrial Strategy will take no further action on Altice UK’s decision to increase its holding in BT to 18% from 12.1%, BT said in a statement on Tuesday.
The review was extended past its initial July deadline and into August after officials requested more information about the BT deal, Bloomberg reported last month.
BT shares rose 1.7% to 159 pence at 9:37 a.m. in London.
Drahi became the telecommunication company’s biggest shareholder last year via Altice, surpassing the stake held by Germany’s Deutsche Telekom AG. But his move to increase that stake to 18% was being scrutinized under the National Security and Investment Act, which came into effect in January.
Read More: UK Flexes Its New National Security Powers to Intervene on Deals
The law gives ministers the options of clearing or blocking deals, imposing conditions or even unpicking them retrospectively. These early probes are seen as important test cases as the UK takes a closer interest in major industries.
What Bloomberg Intelligence Says:
Government clearance of Patrick Drahi’s recent stakebuilding puts BT back in play, though we believe a take-private bid looks unlikely anytime soon and may still face fierce political resistance. A deal would require strong safeguard measures for Openreach, and the unit’s perceived value may have been dented by Liberty Global and Telefonica’s investment in a rival full-fiber infrastructure. Read more.
-- Matthew Bloxham, BI media and telecoms analyst
With the review into Altice’s BT stakebuilding concluded, Drahi will be free to acquire more of more of Britain’s former telecom monopoly if he wants to. He’s publicly supported the carrier’s strategy; Chief Executive Officer Philip Jansen has said he regularly hears from his shareholder after quarterly results and Drahi pushes for faster execution on BT’s fiber plans.
“We see this as a removal of a potential overhang for BT shares,” Morgan Stanley analyst Terence Tsui wrote in a note to clients Tuesday.
Still, the decision doesn’t close the door to future government interventions.
“We will always act to protect our critical national telecoms infrastructure if we judge action is necessary,” a spokeswoman for the BEIS said in a statement. “Under the National Security and Investment Act, acquisitions are assessed on a case by case basis, so any future transaction could be subject to a separate assessment under the Act.”
Read More: Billionaire Drahi Soon Gets a Fresh Shot at BT. Will He Take It?
Attention will now move to the assessment of a Chinese-led takeover of the country’s biggest microchip factory. Originally due last month, a probe into Nexperia Holding’s acquisition of Welsh chipmaker Newport Wafer Fab was officially extended until Sept. 12.
(Updates shares in fourth paragraph, analyst comment in eighth)
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