French conglomerate Vivendi is in exclusive negotiations with telecoms holding Altice over the merger of two of their respective assets, mobile operator SFR and cableco Numericable.
Following a supervisory board meeting this morning, Vivendi has…
French conglomerate Vivendi is in exclusive negotiations with telecoms holding Altice over the merger of two of their respective assets, mobile operator SFR and cableco Numericable.
Following a supervisory board meeting this morning, Vivendi has decided to enter exclusive talks for a period of three weeks.
The company said Altice’s offer is the “most pertinent for the group’s shareholders and employees, with the opportunity for effective execution” and “achieves Vivendi’s objective to rapidly become a leading European media and content player and develop SFR as a dynamic leader in high speed fixed and mobile telephony”.
Today’s decision comes after several days of an intense bidding war between Altice and Bouygues, the parent of wireless player Bouygues Telecom.
Altice has offered a €11.75bn payment to the conglomerate and a 32% share in the equity of the combined listed Numericable-SFR entity.
Vivendi also said the holding’s bid provides “pre-determined exit conditions” from the merged company.
Bouygues offered €11.3bn and a 43% stake in a Bouygues Tel-SFR combination, as well as exit options.
While a merger between Bouygues Tel and SFR would bring the number down from four to three operators, the Numericable deal would have a lesser impact on competition. The French regulator is more likely to have concerns about horizontal consolidation among mobile operators as opposed to a vertical transaction with a cableco.
For a few days, Bouygues appeared to have the upper hand over Altice for several reasons: originally Bouygues had made the highest offer; the proposed deal received backing from industry minister Arnaud Montebourg, hoping it could put an end to the sector’s price war and prevent job losses; and Bouygues had agreed to sell its network to newcomer Free Mobile for €1.8bn to alleviate regulatory concerns.
Reports citing sources close to the matter however indicate that Vivendi saw the Bouygues bid as riskier as both the regulatory review and exit from SFR would likely take longer.
On news of the exclusive negotiations, Numericable’s share price went up about 13% to €31.6 per share while Bouygues’ stock went down 8% to €28.6 per share.
At the end of the three-week period, the supervisory board will meet again “to examine the next steps and to decide if it should put an end to the other options envisaged”, Vivendi said.
