Altice Said to Mull Boosting Cash Portion of SFR Offer

Billionaire Patrick Drahi’s Altice SA is weighing plans to raise the cash part of its offer for Vivendi SA’s SFR unit by as much as 12 percent to help fend off a rival bid from Bouygues SA, people familiar with the matter said.

Altice is assessing a revision to its proposal that could see the 11.75 billion-euro ($16.2 billion) cash portion rise to a level in line with the 13.15 billion euros in cash proposed by Bouygues, the people said, asking not to be identified discussing a private matter. Any increase wouldn’t change the total valuation of Altice’s offer, and would instead reduce the 32 percent stake in the new entity to be held by Vivendi, they said.

Altice, which has said the enlarged company created from a merger of its Numericable Group with the SFR phone company will have a valuation of 20 billion euros including debt, may still opt to keep its original offer unchanged, and remains in discussions with Vivendi based on that bid for now, the people said.

A representative for Luxembourg-based Altice said the company is working on an agreement to merge Numericable with SFR within the framework of ongoing exclusive negotiations. A three-week exclusivity period for Vivendi and Altice to reach an agreement expires on April 4.

Twice Sweetened

Vivendi shares fell 0.3 percent to close at 20.16 euros in Paris and Numericable added 1.1 percent to 28.84 euros, while Altice slipped 0.7 percent to 32.10 euros on the Amsterdam exchange. Bouygues climbed 0.6 percent to 30.45 euros.

Vivendi is selling SFR, France’s second-largest phone company, to focus on media and content properties. Bouygues today extended its offer by two weeks to April 25. Its proposal, already improved twice, would give Vivendi a 21.5 percent stake in the enlarged company created by a combination of SFR with Bouygues Telecom. Bouygues said the bid values SFR at 17.4 billion euros including potential cost savings and additional revenue.

“Bouygues’s improved cash offer is a factor of pressure on Numericable to also do it,” Nuno Matias, an analyst at Banco Espirito Santo SA, said today.

The battle over SFR has drawn in the French government, with officials including Industry Minister Arnaud Montebourg expressing support for Bouygues’s offer because it would stabilize price wars for wireless services. Since discounter Iliad SA entered the market in 2012, France’s mobile prices have been among the lowest in Europe, a boon to consumers that’s prompted job cuts at companies including market leader Orange SA, as well as SFR.

Vivendi is evaluating cash proceeds as well as criteria including regulatory risks, implications for jobs, and the liquidity of the stake in the enlarged SFR it will retain, people familiar with the matter have said.

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