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PARIS, April 7 (Reuters) - French cable company Numericable shares jumped 17 percent to a six-week high on Monday after it won a month-long bidding war for Vivendi's SFR telecom unit against Bouygues.
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.
Shares in Bouygues dropped 6 percent on Monday. Vivendi shares were 1.2 percent higher by 0750 GMT.
Numericable's winning offer comprised 13.5 billion euros ($18.5 billion) in cash, a 20 percent stake in the combined entity for Vivendi and a potential milestone payment.
Numericable billionaire backer Patrick Drahi's Altice will own 60 percent of the combined entity and the remaining 20 percent will be floated on the stock market. Altice shares were up 8 percent.
"Low risk and excellent exit conditions played an important role in Altice's victory," Exane BNP Paribas analysts wrote. "We see very little regulatory risk. We assume closing in Q4.
"Vivendi will be free after a 12-month lock-up period to sell or distribute its shares in the new company. Altice has pre-emption rights and calls to buy Vivendi's stake in three tranches in the next three years. All in all, SFR could be a thing of the past by year-end 2015."
Numericable's purchase of SFR 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.
Shares in Iliad lost around 5 percent on Monday, although they are still 33 percent higher since the start of the year. ($1 = 0.7303 Euros) (Reporting by James Regan; Editing by Erica Billingham)