Bouygues raises offer once again for Vivendi's SFR telecom unit in last ditch attempt
05 April 2014
The battle for control of Vivendi's SFR telecom unit yesterday escalated after French construction and media conglomerate Bouygues offered an extra €1.85 billion in cash, taking its total offer to €15 billion ($20.6 billion) plus stock.
Bouygues' last-ditch gamble came after Vivendi's board opted on 14 March to enter into three weeks of exclusive talks due to end today with rival bidder Numericable, a company controlled by Altice SA, the Luxembourg-based investment vehicle founded by French cable king Patrick Drahi. (See: Vivendi enters into exclusive talks with Altice SA for sale of telecoms unit SFR)
The latest desperate move from Bouygues comes just three days after it extended its offer period for accepting shares to 25 April and tabled a €500-million ($689 million) break-up fee (Bouygues raises stake for Vivendi's telecom unit SFR with €500 mn break-up fee).
Bouygues offered the massive break-up fee as sop in case the deal failed to get regulatory approval - the sole sticking point with Vivendi for opting for Bouygues' takeover offer.
Paris-based SFR is the second-largest mobile operators in France by subscribers after Orange SA, while Bouygues Telecom is the third-largest.
The European monopoly regulator is expected to scrutinise a Bouygues-SFR merger, since the French mobile market would be left with Orange and SFR with a virtual stranglehold leaving the fourth-largest operator Iliad SA's Free Mobile unit at their mercy.
Numericable's last offer in March was €11.75 billion ($16.30 billion) in cash and a 32-per cent stake in the company created through the merger of SFR and Numericable, but several media reports suggested that Numericable had since raised its bid to be nearly in line with Bouygues' offer.
Bouygues, run by the scion of the family-owned construction-to-media group Martin Bouygues, initially offered Vivendi €11.3 billion ($15.7 billion) in cash and a 43-per cent stake in the merged company, which would be spun off and listed on the stock market after securing regulatory approvals.
But during the period of exclusive talks, Bouygues upped the stake by offering to pay Vivendi an extra €1.85 billion in cash, taking the cash component of its offer to €13.15 billion and revising Vivendi's stake in the newly listed Bouygues Telecom-SFR entity to 21.5 per cent, instead of its earlier offer of 43 per cent.
Anticipating regulatory concerns, Bouygues had early last month said that it would sell some of its wireless spectrum and transmission network to Free Mobile for around €1.8 billion.
But despite the sops, Vivendi probably opted for Numericable since a sale to Bouygues would have still attracted anti-trust issues, which in turn would take a long time for the deal to go through and slow down its plans of transforming itself into a pure-play media company.
Paris-based SFR, earlier a joint venture between Vivendi and Vodafone till the British telecom giant sold its entire stake in 2011 to the French conglomerate, provides services for mobile phone, land-line, internet, IP television and mobile internet to more than 21 million customers.
Numericable operates a high-speed cable network covering close to 10 million households, providing high definition television, video on demand, high speed internet and telephony services.
It is the first operator in France to have deployed its own fibre network in France, which covers over 8 million households.
A merged SFR-Numericable would have almost 7 million broadband customers and 21 million mobile customers.