Mar.14 - Vivendi will enter three weeks of exclusive talks with cable group Numericable in an effort to finalise a deal to sell its telecom unit SFR for 11.75 billion euros in cash, plus a stake in the resulting business. Ciara Sutton reports
Both parties had to raise their offers in a bidding war that's been simmering for months. But Vivendi appears to have finally made a decision. It's to enter talks with cable group Numericable to seal a deal for Numericable to buy Vivendi's telecom unit SFR. The 11.75 billion euro sale would also give Vivendi a stake in the business. It's a blow to Bouygues, which had also bid for SFR. Vivendi said the offer from Numericable was the more "pertinent" for shareholders and workers, as well as being less risky. The decision came amid political lobbying with France's industry minister openly siding with Bouygues and criticising Numericable in a morning radio interview. (SOUNDBITE) (French) FRENCH INDUSTRY MINISTER ARNAUD MONTEBOURG SAYING: "This poses a number of problems. Firstly, Numericable is a small business in comparison to SFR. It's a 5 billion euro business which is borrowing 10 billion to buy a business larger than it is." Montebourg had backed Bouygues' bid because it would reduce the number of players in the French mobile market. Fierce competition has sent telecom prices down 20 percent in the past two years. But the Bouygues bid was seen by Vivendi insiders as riskier because it would require a longer regulatory review. Shares in Numericable were up 13 percent on the news, while Bouygues' shares were down 8 percent. Winning the SFR deal would catapault Numericable into the big league of French business. It currently owns a cable network that covers two thirds of French households and sells television and broadband. For Vivendi a sale of SFR would cap a strategic overhaul that began in 2012. Once the group's cash cow, SFR began to drag down Vivendi's results, with operating profit halved from 2011 levels last year.