UPDATE 1-Bouygues' bid for SFR to be financed with cash, debt

Wed Mar 5, 2014 1:59pm EST

* No capital increase needed - sources

* Will not sell Alstom stake to fund bid - source

* 10 bln in synergies from Bouygues-SFR combo - Le Figaro

* Rival Numericable has up to 12 bln eur financing - sources (Adds details, context)

By Sophie Sassard and Leila Abboud

LONDON/PARIS, March 5 (Reuters) - Bouygues' bid for Vivendi's SFR will be financed with cash, debt, and shares in the newly combined company and will not require a capital increase, said two people close to the situation.

Vivendi is expecting offers for France's second-biggest telecom group from French cable operator Numericable and Bouygues, sources earlier said, ahead of a 1900 GMT deadline on Wednesday.

"The financing is perfectly lined up and there is no need to do a cash call," said one of the people of Bouygues' bid.

Reuters was unable to establish the value of the Bouygues offer, but it will compete with a 14.75 billion euro bid being prepared by rival Numericable. A debt financing worth up to 12 billion euros ($16.49 billion) to back Numericable's bid was being worked on Wednesday, banking sources said.

According to a report on Le Figaro newspaper's web site, Bouygues would pay Vivendi in cash and a 40 percent stake in the combined company, bringing its total offer to a value "above 15 billion euros".

Bouygues, the third-largest telecom operator in France, estimates that it can reap 10 billion euros in cost savings from teaming up with SFR, the second-largest, said the report. That is likely higher than the synergies that could be won by combining SFR and Numericable.

Bouygues shares had fallen as much as 2 percent on Wednesday morning before paring back losses as investors worried about how the SFR bid would be financed. They closed down 0.52 percent to 28.78 euros, giving the construction-to-media conglomerate a market capitalisation of 9.23 billion euros.

Another source said Bouygues would not need to sell assets to finance its bid, including its stake in engineering group Alstom.

Bouygues, the construction-to-media conglomerate, faces a tougher battle to get its hands on SFR because merging the number two and three mobile operators would attract tough regulatory scrutiny - a handicap Numericable would not face since it is not a force in mobile.

For its part, Vivendi earlier said it will take its time to decide whether to sell SFR now or continue with its original plan to spin the unit off into a separate company this summer.

A spokesman for Bouygues did not return a request for comment.

To read le Figaro story, please click here: link.reuters.com/dah47v (Reporting by Sophie Sassard, Leila Abboud, and Gwenaelle Barzic)

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