Orange, Bouygues change deal deadline

Big 5

French telecommunications company Orange SA and rival operator Bouygues Telecom have extended the deadline to complete their tie-up by a few days amid disagreements linked to the value of the telecoms unit.

The companies issued separate statements early Thursday saying that negotiations weren’t sufficiently advanced and extending their self-imposed deadline from March 31 to April 3 in a bid to reach a deal.

The boards of Orange and Bouygues SA met separately for more than three hours late Wednesday but both acknowledged that issues remain unresolved.

“At its meeting of March 30, 2016, Bouygues’ board of directors noted that the negotiations between Orange and Bouygues had not progressed sufficiently,” Bouygues said.

Orange said its board considered that the “negotiations were not yet sufficiently advanced” and that it would meet again by April 3.

The companies had set a deadline of March 31 to reach an agreement to minimize the disruption to Bouygues’ staff and to the market.

The merger talks, which have been ongoing for months, have been complicated by the need to align the interests of France’s four major telecoms operators as well as agree on the size of the stake the French state would maintain in Orange.

The parties are working on a deal that values Bouygues Telecom at EUR10 billion ($11.19 billion), matching an offer from Altice NV made last summer which was rejected by Bouygues Chairman and Chief Executive Martin Bouygues.

According to its most recent annual report, Bouygues valued the assets of its telecoms unit at EUR6.2 billion.

The acquisition and breakup of Bouygues Telecom, part of a family-controlled construction and media conglomerate, would transform the country’s telecommunications landscape and likely end a four-year price war that has eroded margins as they vied for consumer subscription fees.

In a bid to avoid antitrust issues, Orange–already France’s largest operator–is working on side deal with two of its rivals.

Telecoms chiefs say consolidation will allow them to invest more in infrastructure and compete with international rivals.

However, past attempts at consolidation have run up against political resistance and the reluctance of Mr. Bouygues to sell a telecom business which he has likened to “a wife.”

Source: MarketWatch