* Cable company's bid accepted over rival Bouygues offer
* Winning offer combines 13.5 bln eur cash, 20 pct stake
* Also includes potential 750 mln eur milestone payment
* Criteria included business logic, jobs, antitrust risk
* Sale plan will now be presented to unions, regulators (Adds reactions from Bouygues, French govt)
By Lionel Laurent and Leila Abboud
PARIS, April 5 (Reuters) - France's Vivendi said it had accepted cable company Numericable's bid for its telecom unit SFR, which would give Vivendi at least 13.5 billion euros ($18.5 billion) in cash plus a 20-percent stake in the new entity.
The plan, which will be presented to unions and regulators for approval, effectively hands victory to Numericable's Franco-Israeli backer Patrick Drahi after a fierce month-long bidding war against fellow billionaire Martin Bouygues, whose family company owns France's No. 3 mobile operator.
The agreed sale of SFR also promises to reshape Europe's third-biggest telecoms market after two years of fierce price competition, triggered by the arrival of low-cost player Iliad in the mobile arena.
Despite a sweetened, last-ditch offer from Bouygues - the outsider in the race but favoured by the French government - Vivendi said on Saturday it had picked Numericable as the better bid in terms of business logic, commitment to preserving jobs, chances of regulatory approval and long-term value.
Vivendi also said that Numericable's bid was "the most balanced" in terms of immediate cash payment and equity, even if Bouygues' latest proposal actually promised more cash upfront.
Numericable had offered 13.5 billion euros in cash, a milestone payment of 750 million euros - linked to underlying return on capital expenditure - and a 20-percent stake in the new entity. Bouygues, meanwhile, had as of Friday offered 15 billion euros in cash and a 10-percent stake.
"(Numericable's bid) should represent a total value above 17 billion euros," Vivendi said in its statement.
Bouygues' bid as of Friday would have valued SFR at 16 billion euros before cost savings, or 16.5 billion including an "earn-out" clause of 500 million euros if certain targets were met.
Bouygues said in a statement following Vivendi's decision that it had in fact made another sweetened offer Saturday morning for 15.5 billion euros in cash and a 5 percent stake in the combined entity. It insisted that its offer had given "more serious" guarantees on preserving jobs.
Numericable was already considered the front runner after Vivendi's board chose it on March 14 for three weeks of exclusive talks. But persistent pressure from Bouygues forced it to sweeten its offer: its last public offer would have given Vivendi 11.75 billion euros in cash and a 32-percent stake.
Both suitors for SFR were backed by billionaire businessmen who have put their all into the fight, lobbying France's government for support, pledging not to cut jobs after the deal, and hitting up debt markets for funds to fuel their bids.
France's Economy Minister, Arnaud Montebourg, warned the government would be "vigilant" in making sure that promises to avoid job cuts were kept.
Martin Bouygues wanted to buy SFR to save Bouygues Telecom, France's third-biggest mobile operator, which has been hit hard by France's fierce telecoms price war since the arrival of low-cost upstart Iliad.
But in the end victory went to Patrick Drahi's vision of marrying his cable group with SFR to create a "national champion" in high-speed broadband and mobile.
The sale of SFR will cap a strategic overhaul at Vivendi that began in spring 2012, when veteran chairman Jean-Rene Fourtou declared there would be "no taboo" in re-examining the 160-year-old group's unwieldy holdings, which ranged from video games to telecoms in Brazil.
Once a cash cow, SFR has seen its operating profit halve from 2011 levels to 1.07 billion euros last year. Nevertheless, SFR accounted for more than half of Vivendi's sales and profits last year.
If the deal goes through, the new entity will have a free float of 20 percent, according to Vivendi. Drahi's holding company Altice will own 60 percent and Vivendi 20 percent.