MARKET REPORT: KKR’s £9bn Italy bid lifts telecom shares

Telecom companies were boosted yesterday after private equity giant KKR swooped on Telecom Italia with a £9billion offer.

The deal, if approved by the firm’s board and the Italian government, would be one of the biggest European private equity buyouts in history. It would total £28billion, including Telecom Italia’s £19billion debt pile.

KKR’s offer was a 45 per cent premium to Telecom Italia’s closing price on Friday. It sent the company’s shares on the Italian Stock Exchange up 30.2 per cent.

The group said KKR made a ‘friendly’ approach based on public information and it will now do four weeks of due diligence.

The offer raised the prospect of a bidding war as rival private equity firms CVC and Advent said they were ‘open’ to discussions with the company.

It also stirred the prospect of private equity firms approaching other telecom giants – pushing up shares in Vodafone and BT.

AJ Bell investment director Russ Mould said: ‘The Italian deal may stir fresh bid speculation, especially as private equity is cash rich, interest rates are low, money is cheap and such financial buyers are on the prowl for companies that can consistently generate cash.’

Stock Watch – ADVFN

Shares in financial data site ADVFN shot up more than 20 per cent after controversial businessman Dan Horsky increased his stake to 9.7 per cent.

Horsky was jailed in 2017 for hiding over $220million in offshore banks, evading more than $18million in US taxes over 15 years.

The retired Israeli-born business school professor is one of three businessmen thought to be planning a takeover of the data company.

Its former director Yair Tauman upped his stake this year from 9.4 per cent to 18.3 per cent while Ron Izaki owns 4.3 per cent through a company he owns.

Shares jumped 20.4 per cent, or 15p, to 88.5p.   

Vodafone closed up 3.2 per cent, or 3.62p, at 117.24p and BT was up 2.5 per cent, or 4.05p, at 164.7p.

Banks were boosted by expectations of a Bank of England interest rate hike at its next policy meeting in December.

The Bank kept interest rates at the record low 0.1 per cent this month and Governor Andrew Bailey said at the weekend that the Bank would ‘have to act’ if ‘febrile’ inflation continued.

Mould said banking stocks are seen as potential beneficiaries of an interest rate rise and tighter monetary policy. 

He added: ‘A strong economy should help their profits and ability to return cash to shareholders via dividends and buybacks, too.’

Natwest shares closed up 1.4 per cent, or 3.1p, at 223.7p and Barclays climbed 2 per cent, or 3.78p, to 194.74p. 

HSBC was up 1.2 per cent, or 5.25p, at 436.95p. They helped pull the FTSE 100 up slightly by 0.4 per cent, or 31.89 points, to 7255.46. The FTSE 250 gained 0.3 per cent, or 62.79 points, to close at 23429.7.

Royal Mail shares jumped another 2.9 per cent, or 14.3p, to 512.8p after a bumper set of results last week saw it announce a £400million payout to investors.

Shares in the postal service rose 9.8 per cent on Thursday after it said a surge in parcel deliveries helped it to a £315million profit for the six months to September 26.

Mecca Bingo and Grosvenor Casinos owner Rank agreed a £77.5million VAT refund from the taxman plus £5.5million of interest. Shares fell 0.7 per cent, or 1p, to 150p.

Technical products supplier Diploma said annual profits soared 44pc from a year earlier to £96.6million. 

The FTSE 250 firm makes seals and controls for specialist equipment and provides various instruments and services for the healthcare sector. It said revenue in the same period rose by 46 per cent to £784million.

Chief executive Johnny Thomson said: ‘Despite market uncertainties, I remain confident in our ability to deliver attractive long-term growth at sustainably high margins.’

Diploma shares bounced 8 per cent, or 256p, to 3460p.

Newly-listed electric vehicle charge point maker Pod Point rose 2.5 per cent, or 6p, to 248p after the Government said new homes from 2022 must have electric vehicle charging points installed.

Ahead of an indicative review of FTSE indices next week AJ Bell said electronic equipment distributor Electrocomponents and veterinary pharmaceuticals Dechra Pharmaceuticals look set to enter the FTSE 100.

Shares in Electrocomponents rose 0.2 per cent, or 3p, to 1255p, while Dechra Pharmaceuticals slipped 1.4 per cent, or 75p, to 5290p.