Page last updated at 11:49 GMT, Monday, 30 June 2008 12:49 UK

France Telecom shelves $40bn bid

France Telecom logo
France Telecom owns UK mobile operator Orange

France Telecom has abandoned its proposed merger with Nordic rival Teliasonera after talks broke down over the financial terms of the deal.

Sweden's Teliasonera rejected the $40bn (20bn; 25.4bn euros) informal cash-and-share offer made earlier in June claiming it was too low.

The decision sent shares in France Telecom up almost 9% at one point, but shares in its takeover target tumbled.

A deal would have created the world's fourth largest telecoms operator.

In a statement, France Telecom said that "the dialogue opened with the board of directors of Teliasonera was unable to reach agreement on its financial conditions".

The company, which owns the Orange mobile phone network, did at no stage make a formal offer for Teliasonera.

Decision applauded

Some analysts applauded the French firm's decision not to raise its offer.

"By pulling out, France Telecom has show that it is not in the business of getting big at all costs," said Vincent Griffon, analyst at CM-CIC Securities.

Shareholders were reassured by the move and sent France Telecom shares up as much as 8.9%. Shares were trading at 18.62 euros , up 6.7%, before midday.

But the news dented shares in Teliasonera, which shed 13.5%, to trade at 43.1 kronor ($7.20; 4.55 euros) in Stockholm.

"As the terms and conditions have not been significantly improved, the board of Teliasonera maintains its view that the proposal substantially undervalues the company," the Stockholm-based firm.

The Swedish government has been trying to sell its 37.3% stake in Teliasonera as part of sweeping plans to privatise a number of firms, but analysts said it was wary of selling at any price.

Finland, which owns 13% of Teliasonera, supported the board's move.


SEE ALSO
France Telecom rebuffed by rival
05 Jun 08 |  Business
France Telecom eyes Nordic rival
18 Apr 08 |  Business
French put va va voom into broadband
08 Aug 07 |  Technology
Share sale dents France Telecom
25 Jun 07 |  Business
France Telecom annual profits dip
01 Feb 07 |  Business
Mobile growth for France Telecom
14 Feb 06 |  Business

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific