Hanging up

6 April 2014 By Pierre Briançon

The French group ignored state pressure and will sell its mobile division to cable operator Altice. It cites execution risks and a desire to keep a stake in SFR’s future upside as reasons for rejecting a rival offer by Bouygues. Consumers and Vivendi investors look better off.

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France’s Vivendi said on April 5 that it had accepted cable company Altice’s bid for its telecom unit SFR, which would give Vivendi at least 13.5 billion euros ($18.5 billion) in cash plus a 20 percent stake in the new entity.

Altice, which plans to merge SFR with its French cable company Numericable, had offered 13.5 billion euros in cash, a milestone payment of 750 million euros - linked to underlying return on capital expenditure - and a 20 percent stake in the new entity. Bouygues, meanwhile, had as of April 4 offered 15 billion euros in cash and a 10 percent stake.

The Altice bid “should represent a total value above 17 billion euros,” Vivendi said in its statement.

Bouygues’ bid as of April 4 would have valued SFR at 16 billion euros before cost savings, or 16.5 billion including an “earn-out” clause of 500 million euros if certain targets were met.

Bouygues said in a statement following Vivendi’s decision that it had made another sweetened offer Saturday morning for 15.5 billion euros in cash and a 5 percent stake in the combined entity.

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The Altice bid “should represent a total value above 17 billion euros,” Vivendi said in its statement.

Bouygues’ bid as of April 4 would have valued SFR at 16 billion euros before cost savings, or 16.5 billion including an “earn-out” clause of 500 million euros if certain targets were met.

Bouygues said in a statement following Vivendi’s decision that it had made another sweetened offer Saturday morning for 15.5 billion euros in cash and a 5 percent stake in the combined entity.

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