LONDON-Attempting to continue its acquisition path, Vodafone Group plc announced an agreement to acquire British Telecommunications plc’s and SBC Communications Inc.’s stakes in French company Cegetel for about $6.2 billion in cash.
Cegetel owns 80 percent of French mobile operator SFR. The buy would give Vodafone control of mobile networks in the five largest European markets.
Under the agreement, Vodafone, which has been eyeing a controlling stake in Cegetel for months, would hold 56 percent of the French company, which also offers fixed-line service. Vodafone also said it made a non-binding cash offer of $6.6 billion to debt-laden Vivendi Universal for its remaining 44 percent interest in Cegetel. The offer is open until Oct. 30 and is at the same share price as that agreed with BT and SBC.
Vodafone would pay $3.9 billion for BT’s 26-percent interest and $2.27 billion for SBC’s 15-percent Cegetel stake.
However, Vivendi, has pre-emption rights to the BT and SBC stakes under Cegetel’s shareholder agreement to buy either or both of BT’s and SBC’s Cegetel interests. Vivendi must pay a 13-percent premium to Vodafone’s offer for SBC’s stake. Vivendi can pre-empt the BT acquisition at the same price as Vodafone’s offer. Vivendi must make any counteroffers for the BT and SBC stakes by Nov. 10.
Vodafone and Vivendi have been maneuvering to take control of Cegetel for some time, however, Vivendi’s financial problems have reduced its options. Vodafone also has been under shareholder pressure not to overpay for the French company, even though Vodafone views majority control of SFR as key to its pan-European assets.
“Should Vivendi wish to maintain or increase its interest in Cegetel, we would be happy to continue working as partners in France, as we have been doing since 1988,” said Sir Christopher Gent, Vodafone chief executive.
Vodafone already owns the 20 percent of SFR, the second-largest mobile carrier in France, not held by Cegetel in addition to its 15 percent stake in Cegetel.
Vodafone said it has existing cash resources and bank facilities to finance the acquisition of all the interests in Cegetel it does not already own.
“Vodafone remains committed to its single A long-term credit ratings,” the operator said. “Furthermore, Vodafone does not expect its short-term and long-term credit ratings from S&P and Moody’s to be downgraded in the event it acquires the interests of all the shareholders in Cegetel, thereby incurring the maximum increase in net debt possible under these arrangements.
