Euro M&A Update

5:00 AM -- There's never a dull moment in Europe as incumbent and competitive carriers alike seek out acquisition opportunities.

  • Portugal Telecom SGPS SA (NYSE: PT) has rejected the improved takeover bid of €10.50 per share made by Sonaecom on February 15. In a letter sent to its investors, PT stated that the offer, which values Portugal's incumbent at €12 billion ($15.8 billion), "continues to be inadequate... The Board strongly recommends that you reject the offer and do not tender your shares." (See Eurobites: Turnaround Time for Telecom Italia.)

  • French alternative carrier Neuf Cegetel Group (Euronext: NEUF) is buying some FTTH expertise, and a few thousand high-speed access customers, by acquiring Parisian fiber access specialist Erenis . Rival Iliad (Euronext: ILD) has adopted the same approach to bring FTTH expertise inhouse. (See Neuf Takes Over Erenis and Iliad Buys Into French FTTH.)

  • A bidding war is brewing for East European incumbent Bulgarian Telecommunications Co. plc . Local media reports in Bulgaria suggest that Russian outfit Sistema JSFC (London: SSA), Türk Telekomunikasyon A.S. , and up to five private equity firms, including Bain Capital , Providence Equity Partners , and Warburg Pincus , are interested in taking a 90 percent stake in the carrier, with €1.8 billion ($2.4 billion) the reported minimum bid required. BTC reported revenues of about $670 million for 2006, about the same as 2005. The bidding process is set to close at the end of April.

  • British media and analysts got excited this week about a potential step up in M&A activity by BT Group plc (NYSE: BT; London: BTA) following a Financial Times interview with incoming chairman Sir Michael Rake. The FT reported Rake as saying he favored more international acquisitions to boost BT Global Services, and that the carrier could afford to carry more debt to fund such inorganic growth. Analysts jumped all over the statement, saying that bids for large international IT and/or integration specialists are now a real possibility. Then BT said Rake had been misquoted. Still, it's hard to imagine that BT, given the success it has had so far with its integrated telecom/IT managed services offering for large corporates, won't open its wallet again to buy more overseas capabilities.

    — Ray Le Maistre, International News Editor, Light Reading

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