Bouygues rebuffs Altice’s $11.3-bn takeover bid

French telecom group Bouygues has snubbed the €10-billion ($11.3 billion) takeover attempt by rival Numericable-SFR, a subsidiary of European telecom major Altice SA.

The board of directors of Bouygues, which met yesterday has ''decided unanimously, after an in-depth review, not to follow up on the Altice group's unsolicited offer to acquire Bouygues Telecom,'' according to a statement.

Altice, controlled by telecom baron Patrick Drahi, had submitted its €10-billion offer to acquire Bouygues Telecom on Monday. (See: Altice to acquire Bouygues Telecom for $11.3 bn). 

By combining the country's second-biggest mobile operator Numericable-SFR and the third-biggest Bouygues Telecom, Drahi was planning to derail Orange's position as France's biggest mobile operator, with a customer base of over 33 million.

Bouygues Telecom is particularly well positioned to take advantage of the growth in the telecoms market with its strong and long-term competitive edge afforded by its portfolio of frequencies and its 4G network, which is recognised as being one of the best in the market, the statement said.

The company said it has the means to return to an EBITDA margin of at least 25 per cent by 2017, which is expected to rise further in the long term.

Further, Bouygues believes that the offer presents a significant execution risk, in terms of competition laws in the sector.

The effects of the forthcoming 700 MHz spectrum auction on the deal has also not been factored in Altice's proposal, it said.

It is believed that Bouygues has concerns about threat from the country's fourth player and newest entrant in the market Free, a subsidiary of Iliad SA.

Potential employment losses arising out of the consolidation is also a matter of concern.
 
On Monday, French economy minister Emmanuel Macron criticised Drahi's acquisition plans, stating that it would have implications on the country's tax payers.

''I don't want to create a 'too-big-to fail' player with such a leverage.If the biggest telecom operator blows up, guess what, who will pay for that? The government, which means the citizens,'' Macron said.

Altice's offer is double the valuation estimated by many analysts. The minister believes that the overvaluation would hinder the company's ability to protect jobs and fuel investment.

"Jobs, investment and better customer service are the priorities,'' Macron said.