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Wednesday, 30 October, 2002, 00:00 GMT
Vivendi rejects Vodafone offer
Jean-Rene Fourtou
Vivendi's new chairman Jean-Rene Fourtou
Franco-American media giant Vivendi Universal has rejected an offer for its 44% stake in French mobile operator Cegetel from the UK's Vodafone.

Vivendi's board of directors said late on Tuesday that it had turned down Vodafone's 6.8bn euro ($6.6bn; 4.5bn) bid on the grounds that it did not reflect Cegetel's true value.

Vodafone, which already controls 15% of Cegetel, has bid a total of 13.07bn euros for the 85% of the French mobile firm that it does not already own - currently shared between Vivendi and minority owners BT Group and SBC.

Vivendi's rejection of Vodafone's offer ups the ante in a race to take control of Cegetel.

The decision comes one day after a French court granted Vivendi an extra month to raise the cash it needs to pre-empt Vodafone's bid for the Cegetel shares held by BT and SBC.

Dilemma

While Vivendi could still accept an increased offer from Vodafone, the media giant's chairman Jean-Rene Fourtou - successor to Jean-Marie Messier - is thought to be keen to increase its stake Cegetel, a cash-rich and profitable company.

An additional reason for hanging onto Cegetel is that without it, Vivendi's main interests would be in the US entertainment media, making it difficult to maintain its identity as a French company.

But many investors would prefer Vivendi to sell up in order to raise cash to pay off its crippling debts.

Fears that Vivendi could press ahead with plans to increase its stake in Cegetel pushed the company's shares nearly 10% lower to 12.15 euros on Tuesday.

Vivendi last week raised about 1.25bn euros by selling its publishing interests outside the US to French media group Lagardere.

There has been speculation that the company could raise more cash to fund a Cegetel takeover by selling part of its utility business Vivendi Environnement.

Banks looking on

But a move to take over Cegetel is thought unlikely to succeed without the cooperation of its lending banks.

"It is hard to see how they could (bid for the rest of Cegetel) without the agreement of their major financial partners, and I think it would be unwise to do so," said Adrian Darley at Gartmore Investment Management.

Vodafone's bid for Cegetel expires on Wednesday.

Separately, it emerged on Tuesday that French prosecutors were investigating complaints that Vivendi had put out misleading financial information under its former chairman Jean Marie Messier.

See also:

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