The UK government will review the investment of Sotheby's owner Patrick Drahi in British telecommunications giant BT amid national security concerns. The French-Israeli billionaire owns an 18% stake in the multinational company through the UK arm of his telecommunications firm Altice, making him BT's biggest shareholder.
The probe comes shortly before the lapse of restrictions preventing a potential takeover of BT by Altice.
Drahi, who bought Sotheby's for £3bn in July 2019 and took the auction house private, has invested £3.2bn to build his stake in BT. He first purchased a 12.1% sharehold in June 2021 before increasing this to 18% in December 2021. The move stoked fears that Drahi would look to takeover the company; at the time, the UK government said it was "monitoring" the situation, Reuters reported. "The government is committed to levelling up the country through digital infrastructure, and will not hesitate to act if required to protect our critical national telecoms infrastructure," a spokesperson said.
While Drahi has yet to outline his vision for BT, he previously said that he did not intend to takeover. However, he caveated that his position could change under certain circumstances—including if a third party made an offer for the business.
The investigation will be led by the UK's business secretary Kwasi Kwarteng, who has exercised his newly established "call in" powers, granted through the 2021 National Security and Investment Act. These allow UK ministers to block transactions—even retrospectively—linked to major national assets if they are deemed a threat to national security.
Sotheby's declined to comment on the situation.
BT will "fully cooperate" with the review, a company spokesperson says in a statement. Share prices in the FTSE 100 company were boosted by Drahi's investment, but fell 5% this morning in response to news of the government probe.
In a tweet earlier this month about a similar review of an unrelated company, Kwarteng wrote: "We welcome overseas investment, but it must not threaten Britain's national security."
Drahi, who is worth an estimated £9bn, has made headlines in recent years for a number of debt-fuelled business deals, which have drawn concern from investors amid a global rise in interest rates.
In December 2021, reports emerged that Drahi was also considering an initial public offering (IPO) for Sotheby's, returning it to public trading three years after he took the 277-year-old auction house private. Sotheby’s has selected the banks Goldman Sachs Group and Morgan Stanley to pursue a potential IPO later this year at a rumoured valuation of around £4bn, excluding debt, according to a Bloomberg report.