By ReutersInformationWeek
France Telecom fired the first real salvo in its campaign
for the Nordic telecoms leader on Thursday, following weeks of
speculation over its interest in TeliaSonera and days after
Reuters reported it was negotiating to raise a loan for a bid.
The French group said it aimed for a "friendly" deal but
would not change the indicative cash-and-shares offer, setting
itself on a collision course with TeliaSonera as it began talks
on what would be one of Europe's biggest mergers this year.
"On the parity, (changing) it is out of the question," Chief
Executive Didier Lombard told a conference call on Thursday.
"There are many non-monetary parameters that could be
adjusted ... This is just the beginning of discussions."
France Telecom and TeliaSonera have given themselves two
weeks to discuss terms. "If we cannot reach a friendly
agreement, we will not be successful," Lombard added.
TeliaSonera Chairman Tom von Weymarn told Reuters the offer
was "significantly" below the group's real value.
The Swedish government is keen to sell its 37.3%
stake in TeliaSonera as part of a privatization program, but
Swedish Financial Markets Minister Mats Odell supported the
company's rejection of the bid as too low.
France Telecom, which was privatized in the early 1990s, is
still 26.69% owned by the French government.
It said TeliaSonera's presence in Turkey and Russia would
allow it expand in emerging markets and strengthen its hand when
negotiating with Internet giants such as Google and Yahoo.
France Telecom, which mainly trades under the Orange brand,
said the combination would also turn it into the world's third
largest broadband provider through DSL phone lines. It said the
deal would boost earnings from 2009 onwards.
SHARES DOWN
But investors, who warned the acquisition carried execution
risks and did not appear to create much value, sent France
Telecom shares down to a 19-month low of 18.20 euros.
And analysts quickly weighed up the possibility of other
firms joining the fray.
The two top possibilities are thought to be Telenor and
Germany's Deutsche Telekom, analysts said.
"I think the current bid price is low, so I wouldn't rule
out other bidders," said Lena Osterberg, analyst at SEB
Enskilda.
Deutsche Telekom has been looking to expand in countries it
is not active in. But it said last month that
"internationalisation" was not "an end in itself" and that it
would buy something if the opportunity was right.
France Telecom stock ended down 5.1% at 18.25 euros,
while shares in TeliaSonera ended up 6.5% at 57.25
Swedish crowns, above the bid value of around 55 crowns.
Under the indicative offer, shareholders would receive three
new France Telecom shares for each 11 shares in TeliaSonera and
would be guaranteed a cash option of 63 crowns per share for the
first 500 shares. The cash portion makes up 52% of the
offer and the shares account for 48%.
France Telecom said the deal was partly driven by the
current wave of consolidation rippling through the global
telecoms market. "In the current context of consolidation, it
appears unavoidable to have critical mass," Lombard said.
Deutsche Telekom last month acquired a 25% stake in
Greek operator OTE, while U.S.-based Verizon Wireless announced
earlier in the day it would buy U.S. rural mobile service
provider Alltel Corp for $28.1 billion including debt.
Meanwhile, India's Reliance Communications Ltd. and South
Africa's MTN are also close to a tie-up.
LOW PRICE
TeliaSonera shareholder Folksam, which owned a 1.2%
stake at the end of April, said France Telecom's bid was very
low and was unlikely to succeed.
"It is not a bid that one is jumping over with joy from a
financial perspective," Carina Lungberg Markow, a spokeswoman
for insurance company Folksam said. "It seems very low."
The offer is equivalent to an enterprise value of 8.5 times
expected 2009 core earnings for TeliaSonera, above a median of
5.7 in the DJ Stoxx telecoms index, Reuters data shows.
The French group said the deal would not lead to any job
cuts but would generate synergy benefits equal to 1% of
combined turnover, which brokerage Natixis estimated in a note
to be worth around 660 million euros and 670 million euros.
(Additional reporting by Blaise Robinson in Paris, Niclas Mika
in Amsterdam, Tarmo Virki in Helsinki and Veronica Ek and Lina
Osterberg; Editing by Andrew Callus, Quentin Bryar, Tim Hepher,
Will Waterman)
By: Astrid Wendlandt and Sven Nordenstam
Copyright 2008 Reuters. See original article on InformationWeek
0 comments:
Post a Comment