British Telecom's Vulnerability to Takeover and Global Market Shake-Ups

The story of Microsoft's potential takeover of British Telecom has left many questioning the company's vulnerability to overseas acquisition. Meanwhile, the Far East financial markets' downturn is expected to have a significant impact on British companies, with EMI and Marks & Spencer among those already feeling the effects.

Key Takeaways:

• British Telecom's "golden share" was scrapped in July last year, making it vulnerable to takeover from overseas companies.
• A Microsoft takeover of BT would require valuing the company at over £40 billion, equivalent to buying the entire British cable industry seven times over.
• Microsoft and BT have already collaborated on an internet package using Microsoft software.
• AT&T, under new CEO Mike Armstrong, may attempt to acquire Cable & Wireless, which could be a more feasible and logical move than a BT takeover.
• EMI's struggles in Japan and the Pacific Rim have shocked investors, with a 10% drop in share price in a single day.
• Marks & Spencer's sales are expected to slow, impacting the company's suppliers, particularly in the British textile industry.

Statistics:

• The UK textile industry owes its existence to Marks & Spencer's pragmatic attachment to suppliers relatively close to home.
• A takeover of British Telecom would value the company at over £40 billion.
• EMI's share price dropped by over 10% in a single day due to struggles in Japan and the Pacific Rim.
• The Far East financial markets' downturn is expected to impact British companies significantly.

Sources:

• [1] "Bill Gates' Trail in BT Bid" by Ben Laurence How, The Times, week of July 1998 (no exact date mentioned)
• [2] "M&S and the Textile Industry" by author, The Times, week of July 1998 (no exact date mentioned)