Microsoft or AT&T will buy British Telecommunications (BT), according to rumours sweeping stock markets in London and New York.
The astonishing rumour added 11.5 pence to BT shares on a day that most other stock prices fell, as investors scrambled to buy just in case the rumour is true. BT still wants a US partner after its take over of MCI fell through and it may now be the target for purchase rather than the acquisitive company.
Analysts said a Microsoft deal would be unlikely but possible as the software giant has begun investing in other network providers, including cable television firms. They said a strategic alliance between the two is more likely and Microsoft may invest in BT to add weight to the deal.
AT&T is a more realistic suitor and is keen to fight off Worldcom/MCI by looking for a major European partner. Some sources claimed Bell Atlantic, another telco hoping to gain the critical mass to compete globally, may also be looking at BT.
At current prices and including a 30 per cent premium, an acquisitive company would have to pay around #47 billion for BT. Microsoft and AT&T are among the few companies that could afford it.
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