When Patrick Drahi’s Altice acquired, through its French cable subsidiary Numericable, a controlling 80% stake in French mobile company SFR from Vivendi last summer, in a take over bid valued at Euros 17 billion, it became the second largest mobile company in France, behind Orange.
The Bouygues Group, which owns the competing number three mobile company Bouygues Telecom, had made a bid at the time of its own for SFR, one actually favored by the French government but which Vivendi rejected in favor of Drahi. This deal went through with Vivendi, retaining a 20% minority stake so it could profit on any upside later on.
With the acquisition of SFR, which then became part of his French cable company subsidiary Numericable to form Numericable-SFR, in one stroke, Patrick Drahi vaulted into the big time in terms of his footprint on the European cable and mobile scene. The Altice shares have done well since, more than doubling after closing the SFR bid last July up until last week, before the rumor mill pushed them up further.
Now the deal maker who never sits still, Patrick Drahi is at it again. After taking detours to other media assets, and more recently a substantial acquisition in the US, he has just announced a bid for Bouygues Telecom itself, for what is thought to be about Euros 10 billion. If successfully concluded, this would merge the number two and number three mobile operators in France and actually leap-frog the market leader there, Orange. Again the stock market is impressed, with Altice shares jumping 20% to almost Euros 140 per share since the bid went public earlier today, later settling back to about Euros 132 per share.
On the Altice website there is so far only a rather terse one-paragraph press release announcing that an offer has been made, implying perhaps the news had to be rushed out when there were worries of it leaking, and certainly there were plenty of rumors concerning the likelihood of such a deal over the weekend.
The Altice release, however, simply states the following:
June 22, 2015 – Altice S.A. (Euronext: ATC) announces that it has made an offer to acquire Bouygues Telecom through Altice’s subsidiary, Numericable-SFR. Altice will update the market in due course.
The price of the bid is not yet disclosed in that release. A companion press release, also issued today, sits on the Numericable-SFR website which in turn also says simply the following:
Following Altice’s confirmation of its offer to acquire, through its subsidiary Numericable-SFR,
This resale process is subject to the negotiation of final agreements and the acceptance by Bouygues of the offer for Bouygues Telecom.
Iliad is the much smaller owner of the fourth mobile operator in France, Free, who has seriously disrupted the market in the last couple of years with major price cutting, thereby gaining significant inroads on the market heavyweights. Bouygues in particular has been feeling the squeeze.
By offering to sell some assets to Iliad, perhaps including unused spectrum rights, clearly Altice hopes to defuse in advance any anti-trust concerns the French government may have over their latest bid for Bouygues Telecom itself. For Xavier Niel, the founder of Iliad, this may be an acceptable consolation prize after being thought to have been lusting after Bouygues Telecom himself.
The London Financial Times reports that Martin Bouygues, the industrialist behind Paris-based conglomerate Bouygues, last year rejected a Euros 5 billion offer from Iliad to buy his telecom subsidiary. The paper claims he also rejected a more recent Euros 9 billion offer made by Mr Drahi himself.
This latest bid, the FT reports, is for around Euros 10 billion. Bouygues is now thought to be holding a board meeting as early as Tuesday to take a position on the offer. So we will know soon enough where the protagonists stand.