Shares of Salford-based broadband giant TalkTalk Telecom Group rose about 17% on Thursday after it said it received “a preliminary and non-binding proposal” from shareholder Toscafund Asset Management (TAM) “regarding a possible cash offer” for TalkTalk at 97p per share.
TalkTalk shares rose almost 20% to around 99p but ended the day at 97.5p, just above the proposed offer price.
The proposal would take TalkTalk private in a deal that values it at £1.12 billion.
“The board has considered the terms of the proposal and has agreed to progress the proposal further with TAM along with taking advice from the company’s advisers,” said TalkTalk.
TalkTalk said however that its chairman and second-biggest shareholder Charles Dunstone had to offer his support for the deal in order for Toscafund to make any firm bid.
Dunstone owns a 29.86% stake in TalkTalk, while Toscafund holds 29.09%, according to Refinitiv Eikon data.
AJ Bell investment director Russ Mould said: “Having been building in stake in TalkTalk in recent years Toscafund may have not unreasonably decided it could do a better job of managing the assets itself out of the glare of public markets.”
TalkTalk added: “The proposal contains a number of pre-conditions to announcing any firm intention to make an offer, including, that TAM receives an irrevocable undertaking from Sir Charles Dunstone in support of such offer including an election for any unlisted share alternative in respect of his entire holding of ordinary shares in the company.
“These pre-conditions may be waived by TAM in its absolute discretion.
“A further announcement will be made as and when appropriate.
“In accordance with Rule 2.6(a) of the Code, TAM is required, by not later than 5.00 p.m. on 5 November 2020, to either announce a firm intention to make an offer for the company in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies.
“This deadline can be extended with the consent of the Panel on Takeovers and Mergers in accordance with Rule 2.6(c) of the Code.”