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In a blow to investors hoping for more consolidation in the French telecoms market, the founder and owner of Altice France, Patrick Drahi, rejected a takeover offer for the firm’s subsidiary — SFR.
SFR is the second-largest telecom operator in France, serving 26 million people.
A consortium of Orange, Bouygues Telecom, and Free offered to pay €17 billion for most of the company’s assets, valuing the entire Altice Group at an estimated €21bn.
Arthur Dreyfuss, Altice’s CEO, informed employees in an internal email on Wednesday that the offer, made on Tuesday, was “immediately rejected”, according to media reports.
The rebuff comes despite the fact that Altice is battling high debt, which had fuelled speculation that it could sell assets as an emergency move. But media reports suggest that Patrick Drahi dismissed the deal as a cheap offer.
Drahi also no longer has full control of SFR’s parent company, as a 45% stake was transferred to creditors as part of a restructuring earlier this year. Even so, the French billionaire still has a 55% holding, meaning he remains the majority owner.
In their offer on Tuesday, Bouygues Telecom, Free-iliad Group and Orange said that the acquisition would pave the way to “step up investments in superfast network resilience, in cyber security and in new technologies such as artificial intelligence”.
Their statement added that the deal would also “consolidate control over strategic infrastructure in France”.
The takeover aimed to hand over 43% of SFR’s assets to Bouygues Telecom, 30% to Free-iliad Group, and 27% to Orange.
News of the takeover appeared to please investors in Orange and Bouygues, with both companies seeing share price increases on Tuesday. Free-iliad isn’t publicly listed, so investors can’t buy its shares on a stock exchange.
Orange shares were mostly flat on Thursday afternoon in Europe, while Bouygues shares dropped 0.8%.
The takeover offer was “honourable”, the CEO of Bpifrance, a major shareholder in Orange, told BFM television. Nicolas Dufourcq added that he expects the negotiations to continue.
Bouygues Telecom, Free-iliad Group, and Orange said in a joint statement on Wednesday that they had taken note of Altice’s decision and that they would “maintain” their offer.
The statement added that they “wish to engage in constructive dialogue with the Altice group and its shareholders in order to assess how this project could progress going forward”.