By Pushkala Aripaka
(Reuters) - Britain's TalkTalk (L:TALK) said it has received a preliminary takeover offer from its third-largest investor, Toscafund Asset Management, to take the broadband operator private in a deal that values it at 1.12 billion pounds.
The company's shares jumped 16.4% to the proposed offer price of 97 pence per share by 0908 GMT, making it the top performer of London's midcap index (FTMC) and indicating the market's approval of the premium offered by the asset manager.
TalkTalk said on Thursday that while its board would discuss the proposal with its advisers, its chairman and second-biggest shareholder, Charles Dunstone, had to offer his support for the deal 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.
TalkTalk did not give any more details about the offer or its plans, but said an offer period has now commenced.
The telecom sector in Britain and Europe has seen several deals in recent years amid intensifying competition, including one between Virgin Media and O2 in May. (https://reut.rs/36Gw2Lu)
Though TalkTalk focuses more on the lower cost segment in Britain compared with players such as BT (L:BT) and Sky (O:CMCSA), its sales also suffered during the coronavirus lockdown.
"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," AJ Bell investment director Russ Mould said.
In July, Sky News reported that TalkTalk had rejected a 135 pence per share offer from the asset manager last year, which would have valued it at 1.5 billion pounds.
TalkTalk went public in 2010 after a separation from former parent Carphone Warehouse.
Barclays (LON:BARC) Bank and Deutsche Bank (DE:DBKGn) are acting as advisers for TalkTalk.