Money in the bank

20 December 2007 By Pierre Briancon

The littleleveraged French telecomandmedia group could have taken on more debt to finance its E4.4bn bid for telecom upstart Neuf Cegetel. It may want to keep its powder dry if an opportunity arises to buy out other minority shareholders.

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Vivendi, the French telecomandmedia conglomerate, Thursday said it had reached an agreement to buy Groupe Louis Dreyfus' 30% stake in telecom operator Neuf Cegetel and would launch a bid for the remaining 30% of the company it doesn't own at E36.50 a share.

Vivendi, through its mobile telecom division SFR, already owns 40% of Neuf Cegetel. If all investors tender their shares, the deal would amount to E4.4bn. SFR will finance the acquisition through a loan granted by Vivendi, which it will pay back by "considerably" cutting down dividend payments over the next three years, the company said. Vivendi says it plans to raise between E1bn and E2bn from its own shareholders at the appropriate time.

Vivendi shares were up 0.4% Thursday in midday trading, giving the company a E36.4bn market capitalization. Neuf Cegetel shares resumed trading after a twoday suspension, down 4% over the last quoted price, which had been boosted by takeover rumors.

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