LONDON - Bouygues raised the stakes again on Friday in a last-ditch effort to try to win Vivendi’s mobile phone unit away from Altice.
Vivendi’s board is expected to meet later Friday to decide whether to sell the SFR mobile phone unit to Altice, a cable and mobile service provider based in Luxembourg. SFR is France’s second-largest mobile provider behind Orange.
Last month, the board entered into a three-week exclusive negotiation period with Altice after weighing bids from both Altice and Bouygues, the owner of Bouygues Telecom, France’s third-largest mobile provider. The exclusive window expires on Friday.
On Friday, Bouygues increased the cash portion of its bid by 1.85 billion euros to 15 billion euros, or about $20.6 billion. The deal, if accepted, would significantly reshape the French telecommunications landscape by combining two of the four largest mobile providers.
On March 14, Vivendi said that Altice had offered to pay €11.75 billion and to give Vivendi a 32 percent stake in Altice’s Numericable, which would be combined with SFR. It also provided Vivendi with predetermined exit conditions, Vivendi said.
Both offers are believed to be in the neighborhood of $20 billion because of the various considerations.
Under its latest offer, Bouygues would take a 51 percent interest in a combined Bouygues Telecom-SFR, with a group of industrial and financial institutions taking a 39 percent stake in the combined company.
Vivendi would hold a 10 percent equity interest in the new company worth about €1 billion before cost cuts in the combined entity. The deal also includes an earn-out clause of €500 million, Bouygues said.
Bouygues had previously committed to pay a €500 million break-up fee if regulators refused to approve the deal or imposed conditions that made the combination untenable.
The company said Friday that it had already addressed potential antitrust concerns by divesting its mobile telephone network and a portfolio of mobile frequencies to Free, a mobile rival.
The investor group includes Caisse des Dépôts et Consignations, a Bouygues shareholder; the family of the French businessman François Pinault; JCDecaux, a minority shareholder in Bouygues Telecom; and Singapore’s sovereign wealth fund.
This is the third time that Bouygues has revised its bid since Vivendi entered negotiations with Altice on March 14.
The bidding war has pitted Martin Bouygues, the billionaire who runs the diversified industrial group that bears his name, against the French entrepreneur Patrick Drahi, who since 2002 has built Altice into a global operation with cable and cellphone assets in Europe and the Caribbean.
In one of those “it can only happen in France†moments, politicians have taken sides over who should win SFR.
Arnaud Montebourg, the minister of economy, has publicly opposed Mr. Drahi’s bid, questioning Altice’s standing as a foreign company and the amount of debt that might be used to acquire the company.
Earlier this week, Vivendi blocked an attempt by a shareholder activist group to access documents related to the sale negotiations after the group, headed by Colette Neuville, sent a bailiff to Vivendi’s offices.
All of this comes as the Autorité des Marchés Financiers, the French regulator of financial markets, has called for more transparency in the negotiations, including in disclosing potential breakup fees.
Altice, for its part, has remained relatively silent about its offer.
The sale of SFR is part of Vivendi’s plan to increase its capital reserves and to expand its existing media assets, like the pay-television provider Canal Plus. Vivendi had previously considered its own initial public offering for SFR.
The battle for SFR is the latest twist for Europe’s telecom sector.
A number of the Continent’s largest mobile, cable and fixed-line providers have begun a new round of consolidation as concerns increase that Europe’s telecom infrastructure is falling behind those of North America and Asia.
Over the last 18 months, Vodafone of Britain, Telefónica of Spain, and Liberty Global, the cable operator controlled by John C. Malone, have announced a series of deals to acquire assets in countries like Britain, Germany and Spain.
Faced with competition from upstart telecom companies, mobile operators are expanding their offerings into cable and fixed-line services to entice customers through so-called bundled deals. In response, cable companies have agreed to deals with content providers and mobile carriers to offer additional services to keep their customers.
The deals include Vodafone’s recent acquisition of the Spanish cable operator Ono for $10 billion and Liberty Global’s acquisition of the Dutch cable company Ziggo for just under $14 billion.
The deal for SFR, which has roughly 21 million wireless customers and five million broadband subscribers, is central to this consolidation, as it pits two of France’s largest telecom operators against each other, both of which need to expand their domestic presence to compete with Orange, the former national monopoly, and upstarts like Iliad.
For Bouygues, which has its own mobile operations in France, the takeover of SFR would cement its role as one of the country’s main mobile carries. For Numericable, which has cable assets in France, but no wireless business, the deal would allow the company to offer bundled cable and mobile services to prospective customers.
