Bouygues raises stake for Vivendi's telecom unit SFR with €500 mn break-up fee

In a fierce takeover battle with rival bidder Numericable for Vivendi's telecom unit SFR, French construction and media conglomerate Bouygues, yesterday raised the stake by extending its offer period for tendering shares to 25 April and tabled a €500-million ($689 million) break-up fee.

Bouygues offered the massive break-up if regulators reject its buyout proposal, which is 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 scrutinize the Bouygues-SFR merger, since the French mobile market would be left with the Orange anf SFR having a virtual stranglehold that would leaving the fourth-largest operator Iliad SA's Free Mobile unit at their mercy.

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.

Vivendi has already opted for an offer from Numericable and entered into exclusive talks that are due to end on 4 April, (See: Vivendi enters into exclusive talks with Altice SA for sale of telecoms unit SFR)

Vivendi expects a potential sale to Bouygues to immediately attract anti-trust issues, which would result in delays in the deal going through and slow down its plan of transforming itself into a pure play media company.

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.

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.

Numericable, controlled by Altice, the Luxembourg-based investment vehicle founded by French cable king Patrick Drahi, has offered €11.75 billion in cash and 32 per cent in the new, merged company.

Paris-based SFR is the second-largest mobile operators in France by subscribers after Orange SA, while Bouygues Telecom is the third-largest.

SFR provides services for mobile phone, land-line, internet, IP television and mobile internet to more than 21 million customers.

SFR was earlier a joint venture between Vivendi and Vodafone, but in 2011 Vodafone sold its entire stake to the French conglomerate (See: Vivendi, Vodafone in talks over SFR stake sale).

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.