Financial advisors to Vivendi have started the process of raising more than £7 billion to gain outright ownership of Vodafone's 44 per cent shareholding in SFR. The company's CEO, Jean-Bernard Lévy, has stated that negotiations with Vodafone will start early next year, but warned analysts that he was prepared to walk away if the UK-based operator attempted to push the price above acceptable limits.
Industry observers close to SFR said the board was considering raising £2.5 billion through a consortium of banks and £1.7 billion from the bond market. Meanwhile, Vivendi would use the £3.5 billion it stands to gain from selling its 20 per cent stake in NBC Universal to General Electric.
Timescales for the deal put in-depth talks to begin in March when the question of a dividend paid by SFR to Vodafone has been agreed.
However, the near constant 'chatter' from various Vivendi insiders about the company's keenness to acquire the remaining 44 per cent holding could place the company in a poor negotiating position. Analysts recently criticised Vivendi following the acquisition of Brazilian broadband operator GVT, seeing it as non-strategic and expensive.
This move has made shareholders worry that Lévy's desire to own all of SFR could lead him to pay too much for Vodafone's shareholding. However, he has firmly denied this claiming he would withdraw from talks if too much was being asked.
But if successful, the CEO said that SFR would then become the main focus for Vivendi in the medium term, rather than fresh acquisitions in emerging markets.
What Vodafone might do with the £7 billion raised from the sale of its SFR stake remains an open question. The company has recently gained £4.3 billion from the sale of shareholdings in China Mobile and another £3.1 billion from selling its interests in Japanese mobile operator Softbank.
Lively speculation that it would acquire the phone and broadband operator TalkTalk has now abated with Vodafone's board seemingly decided against the deal.
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