Vivendi Says 'Non' to Vodafone
Quelle surprise! Vivendi Universal SA has been granted an extra 30 days by a French court to react to Vodafone Group plc's (NYSE: VOD) bids for the bits of Cegetel Vodaphone doesn't already own.
So the legal action worked, then (see Le Legal Action). The new deadline is now December 10.
Vodafone had offers accepted by British Telecommunications plc (BT) (NYSE: BTY; London: BTA) and SBC Communications Inc. (NYSE: SBC) for their stakes in Cegetel, and then offered Vivendi €6.77 billion (US$6.69 billion) for its 44 percent stake (see Vodafone Lays One Hand on SFR).
Now Vivendi has rejected Vodafone's offer, saying it undervalues the operator. Maybe it is hoping to elicit a higher bid from Vodafone, something Vodafone says is an absolute no-no. "It has been made quite clear that we will not be increasing our bid," booms Bobby Leach, Vodafone's head of group financial media relations.
So if, as seems certain, Vivendi sticks with its refusal, would any future offers or negotiations have to start from scratch? "Yes."
Is it possible that Vodafone might repeat the same offer? "That depends on Vivendi's next move," says Leach, treading carefully.
Is it possible that Vodafone might even put forth a lower bid? "Again, that would depend on Vivendi's next action," he says after some careful thought.
That would be, like, soooo interesting...
The most likely outcome, analysts are agreed, is that: (a) Vivendi will not muster the funds to outbid Vodafone for BT's and SBC's stakes; (b) this latest tactic will just delay the inevitable for another month; and (c) Vivendi will end up accepting a bid of some sort from Vodafone somewhere down the line. Vivendi is committed to reducing its approximately €20 billion ($19.66 billion) in debt by selling €12 billion ($11.8 billion) worth of assets by the end of 2003, and its lenders are not keen to increase their exposure to the conglomerate, especially while Vodafone is dangling what must look to them like a "carotte d'or" in front of the Vivendi board.
For those of you who haven't been following this Gallic saga: At the heart of all this M&A action is France's number two mobile operator SFR, which is 80 percent owned by Cegetel. Vodafone wants SFR -- it wants it bad.
But what's the next move in this battle of Euro wits? Is this checkmate for Vivendi? Or does it have a sneaky maneuver with its bishop or rook that could turn the game around? [Ed note: Enough with the chess already.] Well, Vodafone's offer to Vivendi simply lapses after today (Wednesday, October 30). Then, if Vivendi cannot match or better Vodafone's bids for the BT and SBC stakes, Vodafone would have majority ownership and control of Cegetel (and therefore SFR) even without Vivendi's stake (see the table included in Vodafone Lays One Hand on SFR).
Looks like a fait accompli to us. [Ed. note: And enough with the French, too!]
— Ray Le Maistre, European Editor, Unstrung