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Monday, 2 September, 2002, 09:06 GMT 10:06 UK
Vodafone 'mulls bid for French rival'
Mobile phone
Vodafone is considering further expansion
Vodafone is reportedly preparing a bid to gain control of French mobile phone firm SFR by buying out troubled media group Vivendi Universal.

The bid may be a hostile one, according to a report in the Financial Times, as Vivendi's advisors have indicated the French firm is not interested in selling SFR.

Vodafone is thought likely to offer about 8bn ($12.3bn) in cash for SFR.

Analysts say Vodafone is attracted to SFR because France remains the only major European market where it does not have a controlling stake in its mobile operations.

Its prospects of winning control of SFR got a boost from another quarter on Monday as British Telecom confirmed it intends to offload its stake in the French mobile firm's biggest shareholder.

Hoping to pounce?

Debt-burdened Vivendi is struggling to streamline itself by shedding non-core businesses.

Recently-appointed chief executive Jean-Rene Fourtou, who has pledged to solve Vivendi's woes, has negotiated fresh credit with it banks.

But he faces a deadline of the end of September to complete talks on additional funds.

In August, the French firm sold Vodafone its share of their joint venture European internet portal Vizzavi for 142.7m euros (90.4m; $140.5m).

Vodafone currently owns a 32% stake in SFR - 20% of it directly and 15% through French telecoms firm Cegetel.

It is believed to want to increase this by bidding for Vivendi's stake in Cegetel, which controls SFR.

Vivendi owns 44% of Cegetel, which in turns owns 80% of SFR.

Waiting game

Vodafone, which has refused to comment on the report, is thought likely to wait until the end of September to make an offer.

Under existing arrangements, Cegetel share holders are "locked in" to their stakes in the firm till 23 September 2002.

After that date, the firm's ownership can become more fluid.

Cegetel's other shareholders include British Telecom, which wants to sell its 26% shareholding.

"We're looking to sell our stake in Cegetel," said a BT spokeswoman.

"That stake certainly doesn't form a part of our core business, so we are looking to exit that,"

Vodafone has unused bank facilities of $10.65bn which it could use to pay for the purchase, the Financial Times reported.

However, investors gave the news of a possible Vodafone shopping trip the thumbs down.

The giant mobile phone firm, which operates in 17 European countries, has a debt mountain of its own, built up during a spate of acquisitions.

Vodafone's shares fell more than 2% to 101 pence in early trading in London.

Other Cegetel shareholders include US firm SBC Communications, which owns 15% of the French firm.

See also:

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