France Said to Ask Vivendi to Keep Jobs in Evaluating SFR Sale
Industry Minister Arnaud Montebourg plans to tell Vivendi SA (VIV) Chairman Jean-Rene Fourtou tonight that he should keep in mind protecting French jobs and investments in evaluating a sale of the country’s second-largest phone carrier, according to people with knowledge of the matter.
Montebourg requested the meeting as Vivendi’s board prepares to discuss tomorrow Bouygues SA (EN) and Altice SA (ATC)’s competing bids for SFR, each valued at more than $20 billion, said the people, asking not to be identified because the meeting is private. While Fourtou may be more concerned about financial returns and guarantees of a timely exit from SFR, President Francois Hollande and his advisers have asked Vivendi to agree to a set of social considerations, said a top state official, asking not to be named citing government policy.
Fourtou, who will hand over the chairman position to Vincent Bollore this year, is trying to deliver on a promise to investors that he’ll divest telecommunications assets. Yet, he can’t do so without considering the government’s opinion just as Vivendi shifts its business toward French-focused pay-TV unit Canal Plus, in a tightly regulated industry, said one of the people.
Keeping jobs in France -- SFR employs about 10,000 people - - investing in the country’s networks, and providing full financial transparency of all holdings involved in any transaction make up a “red line” that shouldn’t be crossed, the government official said.
Representatives for Vivendi and the government declined to comment on the meeting.
Tonight’s meeting will be the latest in a series between Vivendi executives and representatives from Hollande’s Socialist government. Montebourg yesterday met with Vivendi board member Alexandre de Juniac, one of the people said.
Montebourg has spoken publicly in favor of the bid by Bouygues, the construction and media company led by Martin Bouygues. Although the minister’s position doesn’t represent the rest of the government, the rationale behind his support is shared by Hollande’s entourage, the official said.
Bouygues today boosted the cash portion of its offer by 800 million euros ($1.1 billion) to 11.3 billion euros and promised Vivendi a smaller stake -- 43 percent instead of 46 percent -- in a merged SFR and Bouygues Telecom.
Altice, the cable holding company controlled by Patrick Drahi, said it also put in a revised offer, after bidding 10.9 billion euros in cash plus assets that together would value SFR at about 14.7 billion euros. Changes were made to give Vivendi guarantees about financing and alleviate regulatory risks, said another person familiar with the matter, asking not to be named because the details are confidential.
An acceptance of either offer would mean Vivendi scrapping a plan to distribute SFR stock to shareholders by July 1. Vivendi could also decide to reject both bids and proceed with the planned spinoff.
SFR is only the latest example of major deals in France being negotiated in ministers’ offices and at the president’s 19th-century palace, whether the state has a stake or not in the companies. The debate over protecting French interests has been a political hot potato since Canadian aluminum maker Alcan Inc. bought French rival Pechiney SA a decade ago, eventually breaking it up and shutting plants.
In a letter to French ministers yesterday, Drahi, who holds French and Israeli citizenship, made promises on jobs, investments and favoring equipment made in France. Drahi won’t change SFR nor Numericable’s pricing strategy, he said in the letter, a copy of which was seen by Bloomberg News. Bouygues has made a similar set of pledges.