UPDATE 1-France's TDF wants final bids by November-sources

Mon Sep 16, 2013 11:18am EDT

By Gwénaëlle Barzic, Sophie Sassard and Matthieu Protard

PARIS/LONDON, Sept 16 (Reuters) - The owners of international broadcasting masts operator TDF Group who are seeking to sell its French division for at least 4 billion euros ($5.3 billion) will hold a meeting later this month to decide whether to invite new bids, several sources close to the situation said.

Paris-based TDF, which provides radio transmission services for broadcasting and telecoms companies, received expressions of interest from multiple bidders in August that fell short of its targeted price tag by several hundred million euros, sources with knowledge of the process previously told Reuters.

Private equity fund TPG is TDF's largest shareholder with 42 percent of the equity, followed by France's national investment fund FSI and fellow private equity funds AXA and Charterhouse.

Since August TDF's management and the vendors have had talks with the bidders to "understand their difficulties and their concerns" and the owners of the business will now meet at the end of the month with their advisers to decide what to do next, one of the sources said.

The likeliest outcome is that the sellers will ask for new bids to be made.

"We will ask for firm offers by early November with the aim of closing the deal in the first quarter of next year," said one of the sources.

"The game remains very open and it's very hard to predict the final outcome at this stage, another source said.

"In other similar processes, we saw bidders coming out of the blue at the eleventh hour and win over the others".

At the moment only two bidders remain in the race, said two of the sources, a consortium led by Canada's PSP Capital Inc. and another led by a Hong Kong-based investor.

TDF owns television and radio masts, as well as satellite and internet operations.

U.S. trade rival Crown Castle dropped out of the process after its board deemed an investment in France as too dangerous after Yahoo's acquisition of French online video website Dailymotion was blocked by the government, a source said. Its domestic peer American Tower has just agreed to pay $4.8 billion in cash and assumed debt for the parent of U.S. masts owner and operator Global Tower Partners.

Meanwhile BNP Paribas-backed infrastructure fund Antin was not allowed to bid for the TDF business after it bought masts from Bouygues, France's third-biggest mobile telecoms network operator, last year.

People close to the company have previously said that TDF's owners would not sell the French business for less than 4 billion euros, which they see as a low-end valuation assuming earnings before interest, tax, depreciation and amortisation (EBITDA) improved to about 380 million euros in 2014 and applying sector price multiples of 10.5-11.5 times EBITDA.

That price tag would allow TDF to repay its 3.8 billion in debt and avoid a restructuring.

However people on the other side of the negotiation table are less bullish on forecast EBITDA and tend to apply multiples of between 8 and 10, they said.

"TPG has never hid the fact that the price is 4 billion euros," said one of the sources. "If not they won't sell."

Another one of the sources added: "The outcome is really unclear. It could very well fall apart because TPG is very stubborn on numbers."

TDF declined to comment on Monday, while no one at its biggest shareholder, TPG, was available for comment.

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