After a bidding war, the French media conglomerate Vivendi said Saturday that it would sell its mobile phone unit, SFR, to Altice in a deal worth as much as 17 billion euros, or about $23.3 billion.
Vivendi chose Altice, a cable and mobile service provider based in Luxembourg, over Bouygues, the owner of Bouygues Telecom, the third-largest mobile provider in France. Bouygues had hoped to reshape the French telecommunications market by combining two of the country’s four largest mobile providers.
Under the deal, which is subject to regulatory approval, Vivendi will receive €13.5 billion when the transaction is completed and a later potential payment of €750 million. It will receive a 20 percent stake in a combined entity made up of SFR and Altice’s Numericable, which Vivendi intends to sell in installments at a later date.
The fight for SFR, the second largest mobile provider in France behind Orange, was marked by objections from French lawmakers and a series of escalating counteroffers by Bouygues in recent weeks after Vivendi decided to enter exclusive negotiations with Altice.
The bidding war also pitted two French billionaires against each other: Martin Bouygues, who runs the diversified industrial group that bears his name, and 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.
On March 14, Vivendi entered into a three-week exclusive negotiating period with Altice, which has cable operations in France, but no mobile operations there. Bouygues refused to give up, and made the first of a series of counteroffers on March 20.
Its latest offer came Friday morning, just hours before Vivendi’s supervisory board was set to meet to discuss the SFR sale. Bouygues increased the cash portion of its bid by €1.85 billion, to €15 billion.
Bouygues also would have taken a 51 percent interest in a combined Bouygues Telecom-SFR company, with a group of industrial and financial institutions taking a 39 percent stake.
Vivendi would have held a 10 percent equity interest worth about €1 billion before cost cuts in the new company and would have been eligible for an earn-out clause of €500 million, Bouygues said.
The last-minute offer was compelling enough that Vivendi’s supervisory board extended its meeting over the sale into Saturday.
Even before Vivendi picked a potential suitor, some members of France’s government publicly opposed a merger with Altice.
Arnaud Montebourg, the minister of economy, said he would have preferred a deal with Bouygues, and questioned Altice’s standing as a foreign company and the amount of debt that it might use to acquire Vivendi.
If the deal with Altice goes through, the combined entity is expected to have about €11.64 billion in debt.
In choosing Altice, Vivendi said it viewed the combination of Altice’s broadband business and its mobile operations as complementary and offering the best chance for growth.
Vivendi said it required potential bidders to make a commitment to retain jobs, an issue French lawmakers had expressed concern about. The nature of the negotiations â€" Bouygues promoting its revised offers in news releases and Altice saying very little publicly â€" prompted the French regulator of financial markets to call for more transparency about the discussions, including disclosures of potential breakup fees.
On Wednesday, Vivendi said it blocked an attempt by a shareholder activist group to gain access to documents related to the sale negotiations after the group, led by Colette Neuville, sent a bailiff to Vivendi’s offices.
The sale of SFR is part of Vivendi’s plan to increase its capital reserves and expand its existing media assets, like the pay-television provider Canal Plus. Vivendi had previously considered its own initial public offering for SFR.
The deal comes in the face of a round of consolidation by Europe’s cable and telecommunications providers.
Over the last year and a half, 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.
To attract and retain customers, mobile providers are expanding their offerings into cable and traditional land line services. Cable companies have responded by offering exclusive content and partnering with mobile carriers to offer additional services.
Mark Scott contributed reporting.
