(Adds Vivendi chairman comments)
PARIS, April 6 French cable company Numericable is to launch a rights issue worth up to 4.7 billion euros ($6.44 billion) to help fund its acquisition of Vivendi's SFR, it said in a statement on Sunday.
Numericable won a fierce month-long bidding war against mobile rival Bouygues for SFR on Saturday when Vivendi announced it had decided to go with Numericable's offer, which comprises 13.5 billion euros in cash, a 20 percent stake in the combined entity and a potential milestone payment.
The takeover promises to reshape Europe's third-biggest telecoms market after two years of brutal price competition brought on by the arrival of low-cost rival Iliad into the mobile arena.
It also completes Vivendi's drive to sell assets in order to shift more towards media, leaving it with a 5 billion-euro cash pile, some of which will be returned to shareholders via a special dividend or share buyback, Vivendi's chairman told newspaper Les Echos.
Following Numericable's rights issue, which will be guaranteed by the holding company of Numericable's billionaire backer Patrick Drahi, the remainder of the cash payout to Vivendi - up to 8.8 billion euros - will be backed by debt financing, Numericable said.
Drahi and other executives will give more details at a news conference on Monday, the statement said. Drahi's company Altice will own 60 percent of the combined entity with Vivendi owning 20 percent and the remainder floated on the stock market.
Private equity firms Cinven and Carlyle have agreed to exchange their combined holdings of 35 percent in Numericable for cash and shares in Altice, Numericable said.
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.
Even though Bouygues later insisted that it had made the more serious guarantees on preserving jobs - a top priority for the French government at a time of record unemployment - Vivendi's chairman told Les Echos that the overlap with SFR would have been too great for a Bouygues deal to work.
"A tie-up with Bouygues would have created a group with a mobile market share of 47 percent, which would have been untenable in terms of competition," Jean-Rene Fourtou said in an interview published on Les Echos' website on Sunday evening.
"The situation would have been difficult to manage, even though Bouygues had promised not to lay anybody off for three years ... We could not allow our staff to embark on a project knowing that there would be one-third too many employees."
Fourtou added that Vivendi's restructuring was now complete and that assets such as Brazilian telecoms operator GVT would stay with the company.
Vivendi will make clear its plan to return capital to shareholders when it publishes the agenda for its annual shareholder assembly on June 24, Fourtou said. ($1 = 0.7303 Euros) (Reporting by Lionel Laurent; Editing by Robin Pomeroy)