BT Group Plc's new chairman Adam Crozier s first move may be to barricade himself inside the boardroom at its new headquarters.
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After a month on the board of Britain's biggest phone company, Crozier will start as chair Wednesday. It's likely that he will need to get straight to work preparing for a possible takeover bid for BT, a move that top executives and advisers expect to come as soon as the next few months, according to people familiar with the matter.
The London-based group brought in U.K. advisory firm Robey Warshaw and Goldman Sachs Group Inc. as defense advisers after French billionaire Patrick Drahi revealed a 12.1% stake in June, making him its biggest shareholder overnight.
One person said that the U.K. takeover rules prevents the telecommunications tycoon from increasing the stake on December 11, and that BT is preparing for the possibility that he buys more shares in the open market or builds his position suddenly via derivatives, like he did with his initial stake.
The company has tightened its defenses, including change-of-control clauses for its debt, as a result of the prospect of that, according to Bloomberg News earlier this month. In recent weeks, Drahi has moved more money into the U.K. company that holds BT shares.
Crozier, a former Chief of Royal Mail Plc and broadcaster ITV Plc, arrives at a time of upheaval and vulnerability for former state telecom monopoly BT, which has left its historic offices in St. Paul's Cathedral in the City of London.
Competition, Brexit, an accounting scandal, and regulation, including the ban of key 5 G wireless supplier Huawei, have led to a drop in its shares by more than 50% in the last five years. One person said that the board might find it hard to advise against a generous premium if one is offered.
Since taking over the stake, Drahi has met BT's top executives and quizzed them about growth plans, according to a person familiar with the matter. In its most recent results BT made a point of highlighting its progress in slashing costs. They remain higher than competitors, but that may help preempt one of Drahi's favorite tactics at his target companies.
Representatives for Altice and BT didn't want to make a statement.
BT shares rose as much as 4.3% in early trading on Wednesday.
BT may draw interest from further afield, too. On Sunday, the Economic Times newspaper reported that rival billionaire Mukesh Ambani was considering a takeover or other investments in BT through his conglomerate Reliance Industries - although Reliance denied the story.
BT's second-largest shareholder, Deutsche Telekom AG, which holds 12% of the market, has openly fanned speculation, with CEO Tim Hoettges saying he expects change in the coming year and he could be a king maker. After DT sold its half of mobile carrier EE, the bar for him to net a return is high.
Private equity could make a big difference. KKR Co. Inc.'s attempted $12.2 billion takeover of BT's Italian equivalent Telecom Italia SpA shows their appetite for telecom assets. The Mail on Sunday reported private equity firms valuations of Openreach BT's infrastructure unit had reached 40 billion pounds $53 billion more than double the group's total market value. CVC considered a takeover of BT last summer when its valuation hit an 11 year low, Bloomberg News reported.
The management of BT has strong links with private equity. Crozier is also chairman of Kantar, a market research firm bought by Bain Capital two years ago. After his successful stint at WorldPay, the Bain connection is deepened by Philip Jansen's continued role as a long-time adviser to the firm, while his brother Chris also serves under Crozier as Kantar's new CEO.
Similar digital infrastructure assets currently fetch high valuations, bidders may focus on BT's fiber optic infrastructure. Jansen said that he was open-minded about how to fund its rollout, despite the fact that BT has historically opposed carving out its network division Openreach. BT recently gave up a search to find a joint venture partner for Openreach's rural rollout.
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