Numericable wins SFR bidding war

Parent company Vivendi accepts cable operator’s offer of €13.5bn cash, plus 20% stake in new company

6 April 2014

NUMERICABLE has won the turbulent and bitter month-long bidding war for French telecoms giant SFR.

Vivendi, the parent company of the French telecoms giant, announced on Saturday that it had decided to sell SFR, the second largest operator in the French mobile market, to the cable operator for €13.5bn plus a 20% stake in new entity SFR-Numericable.

The deal will now go to regulators and unions before being finalised, but few doubt it will go ahead.

It is €2.6bn more than Numericable’s first offer, which includes a €750m “milestone payment” linked to performance, and leaves rival bidder Bougyues Telecom facing challenges ahead in the French telecoms market.

Business experts are already speculating that it may try to strike a deal with another player in the French telecoms market, Free. In an attempt to pacify the competition watchdogs in its pursuit of SFR, Bouygues had agreed to sell its mobile network and some frequencies to Free - and though that deal is now off, experts are wondering whether further business discussions will take place.

Numericable was already considered the frontrunner for SFR after Vivendi’s board chose it on March 14 for three weeks of exclusive talks.

But Bouygues kept up the pressure, improving its offer three times after Numericable was identified as the preferred bidder. It submitted another bid shortly before Vivendi’s board met on Friday afternoon.

Bouygues’ bid on Friday valued SFR at €16bn before cost savings, with an added €500m milestone payment based on returns.

But Vivendi said it had decided that the Numericable offered better growth potential. As well as cash, Vivendi will take a stake in the new company created by the deal.

Bouygues said in a statement following Vivendi's decision that it had made a further offer on Saturday for €15.5bn and a 5% in the combined entity. It insisted that its offer had given "more serious" guarantees on preserving jobs.

Numericable's victory will disappoint France’s newly promoted economy minister Arnaud Montebourg, who in his role as industry minister before the recent government reshuffle openly backed Bouygues’ bid. He has warned that the government would be “vigilant” in making sure that promises to avoid job cuts were kept.

The successful bid also heaps pressure on Numericable. New company SFR-Numericable will carry €11.6bn debt, which experts warn could limit its ability to cut prices.

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