* Deal set to close at end-2014 or early 2015 - Vivendi CFO
* Vivendi has yet to decide how to use SFR sale proceeds-CFO
* Numericable shares up 15 pct, Bougues shares down 5 pct
(Adds comments from Vivendi, Numericable, updates shares)
By Dominique Vidalon and Gwénaëlle Barzic
PARIS, April 7 Shares in French cable company
Numericable surged on Monday after it won the battle
to buy Vivendi's telecoms arm SFR, in a deal which
creates the second-biggest player in a reshaped French telecoms
Despite a sweetened, last-ditch offer from rival 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
"The logical choice and the choice that will allow for the
development of a very high-speed network in France prevailed,"
Numericable's billionaire backer Patrick Drahi told a news
conference, where he said his victory was down to preparation
and seven years' work on the project.
Drahi said he will meet on Tuesday for talks with Economy
Minister Arnaud Montebourg, who had favoured the Bouygues offer.
Montebourg, a former industry minister who was promoted to
be economy minister in last week's reshuffle, feared the
Numericable deal would cost more jobs and spoke out during the
month-long bid battle against Drahi's tax status, Swiss domicile
and the way Numericable is structured.
But such opposition fell flat and Numericable, 40 percent
owned by Drahi's Luxembourg-based holding company Altice
, said it hoped to complete SFR's purchase in the
fourth quarter of the year.
Vivendi finance chief Herve Philippe told analysts he was
expecting the closure by end-2014 or early 2015 of a deal he
called "a significant step in Vivendi's strategy to focus on
media and content".
Shares in Bouygues, whose Bouygues Telecom unit has been
hard hit by the price war that triggered the bid battle,
dropped 6 percent. Vivendi shares were 1.4 percent higher while
Numericable shares were up 15.4 percent.
Bouygues, which on Saturday took note of Vivendi's decision,
has not made any new comments since then.
Numericable's winning offer - comprising 13.5 billion euros
($18.5 billion) in cash, a 20 percent stake in the combined
entity for Vivendi and a potential milestone payment - creates
the second-biggest player in the French market after Orange
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 10.5 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".
Numericable said on Sunday it would launch a rights issue of
new stock worth up to 4.7 billion euros to help fund the
Following the issue, which will be guaranteed by Altice, the
remainder of the cash payout to Vivendi - up to 8.8 billion
euros - will be backed by debt financing, Numericable said.
Private equity firms Cinven and Carlyle
have agreed to exchange their combined holding of 35 percent in
Numericable for cash and shares in Altice, Numericable added.
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
. Shares in Iliad lost around 5 percent, though they are
still 33 percent higher than at the start of the year.
The sale completes Vivendi's drive to sell assets in order
to shift towards media, leaving it with 5 billion euros in cash,
some of which may be returned to shareholders via a special
dividend, share buybacks or both, finance head Herve Philippe
Vivendi will detail its plan to return capital to
shareholders when it publishes the agenda for its annual
shareholder meeting on June 24, Chairman Jean-Rene Fourtou had
told newspaper Les Echos.
Fourtou and deputy board chairman Vincent Bollore see
Vivendi's future in its pay-television unit Canal+, Universal
Music Group and Brazilian broadband specialist GVT.
Vivendi had good reason to believe it could close the sale
of its Maroc Telecom unit by the end of May, Philippe said.
Vivendi also plans to use some of the proceeds from the SFR
and Maroc Telecom sales to pay down debt, which stood at over 11
billion euros at end-2013. The rest would go to acquisitions to
fulfill Vivendi's ambitions in media.
"Clearly our policy is to be in a position to invest,"
Philippe said. "The goal is to develop Vivendi in media and
content and to make some investments."
($1 = 0.7303 Euros)
(Additional reporting by James Regan; Editing by Andrew Callus
and David Holmes)