The UK government will review Sotheby’s owner Patrick Drahi’s investment in British telecommunications giant BT amid national security concerns. The French-Israeli billionaire holds an 18% stake in the multinational through the British branch of his telecommunications company Altice, making him BT’s largest shareholder.
The investigation comes shortly before the expiry of restrictions preventing a possible takeover of BT by Altice.
Drahi, who bought Sotheby’s for £3bn in July 2019 and took the auction house privatized, invested £3.2bn to build up his stake in BT. He first bought a 12.1% stake in June 2021 before increasing it to 18% in December 2021. The move fueled fears that Drahi was seeking to take control of the business; at the time, the British government said it was “monitoring” the situation, Reuters reported. “The government is committed to leveling the country through digital infrastructure and will not hesitate to act if necessary to protect our critical national telecommunications infrastructure,” a spokesperson said.
While Drahi has yet to set out his vision for BT, he has previously said he has no plans to take over. However, he warned that his stance could change under certain circumstances, including if a third party makes a bid for the company.
The investigation will be led by UK Business Secretary Kwasi Kwarteng, who has exercised his new “appeal” powers, granted by the National Security and Investment Act 2021. These allow UK ministers to block transactions, even retrospective ones, related to key national assets if they are deemed to pose a threat to national security.
Sotheby’s declined to comment on the situation.
BT will “cooperate fully” with the review, a company spokesperson said in a statement. Share prices of the FTSE 100 company were boosted by Drahi’s investment, but fell 5% this morning in response to news of the government inquiry.
In a tweet earlier this month about a similar review from an unrelated company, Kwarteng wrote: “We welcome foreign investment, but it must not threaten Britain’s national security.”
Drahi, who is worth around £9billion, has made headlines in recent years for a number of debt-fueled trade dealswhich raised investor concerns amid rising global interest rates.
In December 2021, reports surfaced that Drahi was also considering an initial public offering (IPO) for Sotheby’s, bringing it back to public trading three years after taking the 277-year-old auction house private. Sotheby’s has selected banks Goldman Sachs Group and Morgan Stanley to pursue a possible IPO later this year at a supposed valuation of around £4bn, excluding debt, according to a Bloomberg report.