PARIS—European cable magnate Patrick Drahi is trying to keep up
his acquisition spree.
Altice SA, the Luxembourg-based telecommunications company
controlled by Mr. Drahi, has offered about €10 billion, or roughly
$11.4 billion, to buy French mobile operator Bouygues Telecom,
according to people familiar with the matter, a deal that would
increase Mr. Drahi's power in the French market by reducing the
number of mobile operators from four to three.
As part of the offer, made about 10 days ago, Altice is
proposing to merge Bouygues into Altice's existing French
operations, called Numericable-SFR, one of the people said. That
would make the combined group France's largest telecom company in
terms of subscribers, overtaking former monopoly Orange SA.
Parent company Bouygues SA will consider the offer at a board
meeting Tuesday, but it is unclear whether Bouygues Chairman Martin
Bouygues, who controls the firm, will accept, the person added.
For Mr. Drahi, buying Bouygues Telecom would accelerate a $30
billion spate of purchases in the past year that have turned him
into a player—albeit a highly leveraged one—on both sides of the
Atlantic Ocean.
He most recently agreed to buy U.S. cable operator Suddenlink
Communications for $9.1 billion. That followed an $8.4 billion deal
last year to buy Portugal Telecom. Mr. Drahi has said that he plans
to continue looking for deals in the U.S.
Mr. Drahi's biggest bets so far, however, have come in France.
Just over a year ago, he beat out Mr. Bouygues in a takeover battle
to buy Vivendi SA's SFR, which valued the company at €17 billion.
He then swept in earlier this year to buy the 20% of the company
Vivendi hadn't sold—faster than originally planned.
For Mr. Drahi, buying Bouygues Telecom would allow him to make
more crucial cost savings in areas including network investments,
marketing and information technology. Altice relies for the bulk of
its revenue on Numericable-SFR.
At the same time, Mr. Drahi has also expanded in French media.
Earlier this month, France's competition authority approved his
deals to buy the newspaper Liberation and the magazine group
L'Express.
Mr. Drahi's ambition to consolidate the fractious French telecom
market could run into regulatory obstacles with the French
government, which has recently opposed consolidation.
On Sunday, French Economy Minister Emmanuel Macron fired a
warning shot against the deal, saying that companies should be
focusing on investment and jobs, not mergers.
"The consequences of consolidation are negative in these
respects, as several recent cases in Europe have proven," Mr.
Macron said. "The time isn't right for opportunistic mergers that
could benefit some but aren't in the public interest."
The comments come as the European Commission continues to take a
tough stance on mergers in the telecom space, arguing that
competition should be maintained to the benefit of the consumer.
France's competition watchdog has also said it would be wary of
such deals.
To address potential antitrust concerns, Mr. Drahi has struck a
side deal with Iliad SA—owner of another mobile operator in France
called Free Mobile—to purchase parts of Bouygues's telecom network
and spectrum, the people said.
Since the arrival of Iliad's Free Mobile in early 2012 set off a
price war, French telecom companies have said that their market is
too competitive. Bouygues Telecom, the smallest of the three
incumbent operators, has been one of the hardest hit by the price
war. The company controlled by conglomerate Bouygues SA, whose
operations also include construction and media businesses, last
year slashed jobs to recover profits. Many analysts have said
Bouygues Telecom will have trouble surviving as a standalone and
some saw the job cuts as a preparation for a sale.
Mr. Drahi's Altice has been keen on a Bouygues purchase for some
time, according to executives, because it would shrink the number
of mobile carriers in France to three from four. But Bouygues has
appeared unwilling to sell.
The price tag offered by Mr. Drahi is much higher than an offer
for the company made by rival Iliad last year, which valued
Bouygues Telecom at €5 billion to €6 billion, according to people
familiar with the matter. Bouygues last year held talks with both
Iliad and Orange to try to find a way to consolidate the market.
But the three couldn't agree on terms and a price. Most analysts
value Bouygues Telecom at around €5 billion.
French newspaper JDD first reported the news of Mr. Drahi's
Bouygues bid on Sunday.
Write to Ruth Bender at Ruth.Bender@wsj.com and Sam Schechner at
sam.schechner@wsj.com
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