* 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 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
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
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
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
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.
Vivendi has agreed to a one-year lock-up period before it
can start selling its stake.
($1 = 0.7303 Euros)
(Reporting by Lionel Laurent; Editing by David Holmes, Kevin
Liffey and Bernard Orr)