It looks like Vivendi’s SFR is becoming the WhatsApp of the TelCo sector in France – Bouygues made a formal offer yesterday to Vivendi offering to pay nearly €2 Billion more for its subsidiary SFR. The exact deals of the term would be €13.15 Billion in cash, as well a %21.5 stake for Vivendi in the new SFR-Bouygues Telecom entity that would be formed from the merger, as noted in Bloomberg. According to Bouygues, this values SFR at €17.4 Billion.
Vivendi had previously announced that it was in “exclusive negotiations” with Numericable parent company Altice; however, with the Bouygues counter offer announced publicly, Vivendi shareholders are demanding that the Bouygues deal be looked at; however, it’s not clear that price is the only thing at play here. A combined SFR-Bouygues entity could pose serious anti-trust issues in the wireless sector, as they close the gap on Orange in terms of market share. Predominantly a fixed internet provider, Numericable currently has little market share in the mobile space as compared to Bouygues, Orange & Free parent-company Iliad.
Lastly, there is a question of branding to be considered. Bouygues & SFR are considered to have been hit the worst by Iliad’s launch of Free Mobile in 2012 – the catalyst for Vivendi putting a Sell option on SFR – and so putting to ailing companies together may seem like bundling losers, where as Numericable has been left largely untouched, focusing more on its fiber optic fixed internet offer in France, which has a reputation for being among the best.
It’s hard to tell how Vivendi will react, but it is clear that brand, anti-trust & valuation on being weighed very heavily in the Vivendi board room this week.
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