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BT shares rise amid takeover talk

Venture capitalists are reportedly sniffing around BT, but a £4bn pensions shortfall and a price tag of £20bn could put them off
Written by Graeme Wearden, Contributor

Shares in BT rose by 5 percent on Friday after it was reported that the telco could be the subject of a £20bn takeover bid.

According to The Times,  a number of global private equity firms have been examining BT as a potential bid target. Such a deal would costs upwards of £20bn, making it easily the biggest ever takeover of a British company.

The newspaper cited an unnamed senior telecoms advisor within a venture capital operation, who said his firm had looked at launching a bid for BT.

BT said on Friday morning that any such work was "highly speculative", and insisted that it had not received a bid. However, its shares jumped on the back of the report.

BT is an attractive target to a private equity firm, as it has reliable and well-established revenue streams. These could be used to pay off any debts run up as part of a successful takeover bid.

The company is also on a much firmer financial footing than in previous years, where it was hampered by debts totalling almost £30bn.

However, BT does also have a pension deficit of almost £4bn, which may deter bidders.

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