* Vivendi offered 10.5 bln euros cash plus 46 pct of new co
* Rival Numericable bid offers 11 bln in cash and 32 pct
* Bouygues would spin off new entity after acquisition
* Vivendi expected to review bids in coming weeks
(Adds sources on Numericable not raising bid)
By Leila Abboud and Matthieu Protard
PARIS, March 6 French conglomerate Bouygues
has made an offer for the telecoms arm of Vivendi
that would give the seller a bigger potential payday
than a rival bid but take longer to arrive and face more
Bouygues, with interests from telecoms to construction,
offered 10.5 billion euros ($14.4 billion) in cash for Vivendi's
SFR and 46 percent of the new company in a planned spin-off.
A competing bid from French cable operator Numericable
included 11 billion euros in cash, granting Vivendi a
32 percent stake in the new company, sources said earlier.
A tie-up between SFR and Bouygues would create Europe's
seventh-biggest telecoms group by sales. In France it would rank
ahead of current market leader Orange in terms of
If accepted by Vivendi and approved by regulators, the
Bouygues offer announced on Thursday would consolidate the
French market to three from four mobile players, potentially
easing a price war sparked by low-cost operator Iliad's
entry into the mobile arena in January 2012.
The price war is partly why Vivendi has been seeking to cut
its exposure to the capital-intensive telecoms business to focus
more on pay-television and music. It was preparing to split SFR
into a separately listed company this summer, but is now open to
offers for the business.
The battle for SFR could hinge on how Vivendi's board gauges
the value of the shares it will receive in the new group, its
appetite to wait out an antitrust review that could take a year
and which company it sees as a better long-term partner, people
close to the deal said.
Vivendi plans to review the offers in the coming weeks.
The government has also signalled that it could weigh in to
protect jobs - a key concern with the French unemployment rate
hovering at 10 percent - and ensure that the operators keep
promises to invest in key infrastructure.
Both bidders have offered some assurances on employment.
Numericable has said it would be hiring, whereas Bouygues said
its offer would involve no forced redundancies, implying
voluntary departures are possible.
Bouygues, a family-controlled group led by billionaire
Martin Bouygues, potentially has the tougher battle to win SFR
because merging France's No.2 and No.3 mobile operators would
attract intense regulatory scrutiny.
Numericable, backed by billionaire entrepreneur Patrick
Drahi, would not face such obstacles because it is not a force
in mobile. It owns a cable network serving two thirds of French
households and sells broadband and television services.
Bouygues Chief Financial Officer Philippe Marien said talks
had not yet begun with French antitrust regulators but the group
is ready to take steps to protect competition. "We will do what
it takes for the market to stay competitive," he said.
Sources said earlier that Bouygues would be ready to sell
mobile spectrum and some of its 15,000 antennas. Iliad, which
has been racing to build its mobile network, would be the
obvious buyer and beneficiary of such disposals, analysts said.
Marien said Bouygues would also help so-called virtual
mobile operators, which rent capacity on other carriers'
networks, to preserve competition. Similar measures helped to
get telecoms deals approved in Austria.
The Bouygues deal would split out the combined company into
a new entity in which Bouygues would remain the largest
shareholder with 49 percent. Vivendi would have 46 percent and
outdoor advertising group JCDecaux, long an investor
in Bouygues Telecom, would own the remaining 5 percent.
The new company would then make a share issue to which
Bouygues would not subscribe. Marien said 3 billion euros would
come from the issue and asset disposals to placate regulators.
Once listed, Vivendi would be clear to sell off 15 percent
of the new company, Bouygues said, and would subsequently be
free to sell its remaining interest when it sees fit.
Bouygues said its bid valued SFR at 14.5 billion euros
before cost savings from the deal and 19 billion euros after.
For its part, Numericable sees its bid as valuing SFR at
14.5 billion euros before cost savings, said a source close to
the company. Numericable will not raise its offer because it is
confident that it is more attractive than Bouygues, two people
close to the situation said on Thursday night.
How much costs can be cut from the tie-ups is disputed.
Bouygues estimated the net present value of the cost savings
from the deal would be 10 billion euros, with 80 percent coming
from operational costs and 20 percent from network investments.
Numericable has not given a comparable figure. The person
close to the group said synergies could be 12 billion euros.
Barclays analysts said the Bouygues deal was likely to
generate double the synergies of Numericable's offer.
Shares in Bouygues closed up 6.6 percent. Numericable fell
5.3 percent, Iliad rose 7 percent and Vivendi rose 1 percent.
Bouygues was advised by HSBC and Rothschild on its
bid. HSBC is financing the debt for the offer.
($1 = 0.7278 euros)
(Additional reporting by Gwenaelle Barzic; Editing by Andrew
Callus and David Goodman)