Bouygues to fund $24 billion French telecoms deal without divestments
Bouygues' Strategy for Financing Major Telecoms Acquisition
By Gianluca Lo Nostro
May 7 (Reuters) - French conglomerate Bouygues said on Thursday it does not plan to sell assets to fund its joint 20.35 billion euro ($24 billion) cash bid for rival operator SFR, the largest telecoms acquisition in Europe in recent years.
Financial Structure and Funding Approach
Chief Financial Officer Stephane Stoll said the group's financial structure allows it to finance the deal without difficulty and that it would not require additional credit lines.
No Need for Asset Disposals
"No asset disposals are envisaged to finance this — it is absolutely not necessary," Stoll told reporters after presenting first-quarter results that showed an 11% rise in operating profit.
Market Context and Consortium Details
Family-owned Bouygues is spearheading telecoms consolidation attempts in France, where operators have engaged in intense price wars that have increased pressure on margins.
The company is leading a consortium, alongside Iliad's Free and Orange, which is in exclusive talks with Altice France, the parent of SFR, until a May 15 deadline.
Deal Structure and Timeline
Under the terms of the proposed deal, Bouygues would acquire the largest share of SFR's assets, with Free and Orange sharing the remaining 58%.
"This is obviously a price that will be paid in cash by the consortium," Stoll added, declining to comment on whether negotiations may exceed the set timeline.
Financial Results and Analyst Reactions
Quarterly Performance
Bouygues reported first-quarter current operating profit from activities of 77 million euros ($90.4 million), while sales fell to 12.18 billion euros, down 1.6% like-for-like from 12.58 billion euros a year earlier.
Analyst Expectations and Market Impact
Analysts polled by the company in a consensus poll had estimated an operating profit of 66 million euros on revenue of 12.39 billion euros. Exchange rate effects had a negative impact of 200 million euros on revenue, according to the company.
Shares of Bouygues slid 2.2%, with analysts at JP Morgan saying the results were "light across the board".
Other Business Developments
Separately, Bouygues announced it had won a contract as part of a consortium to construct Sweden's East Link railway project, with an estimated total value of 1.2 billion euros.
($1 = 0.8512 euros)
(Reporting by Gianluca Lo Nostro; Editing by Milla Nissi-Prussak, Christoph Steitz and Kim Coghill)
