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Vivendi SA share price down, faces tough decision over its SFR phone unit as the bidding war gets more fierce than ever

The bidding war over Vivendi SAs phone unit SFR between Bouygues SA and Altice SA seems to be heating up after Arnaud Montebourg, who is the French Industry Minister, said that according to him Vivendi SA prefers the offer of Altice SA cable holding.

Mr. Montebourg said in an interview for Europe1 radio station, which was cited by Bloomberg: “I understood that the heads of Vivendi wanted to sell SFR to Numericable, no matter what. This can be a problem because the company is very small, a small company taking on a huge amount of debt.” He also commented: “We know Mr. Bouygues and he said there wouldn’t be job cuts. The state is not the owner of the one or the other. The state expressed a preference. There are some problems: overwhelming debt, no competition in cable, fiscal problems. We are going to solve these problems now.”

Yesterday it became clear that both competitors have increased the cash portions of their bids over the SFR unit. In addition, substantial stakes in the new entity that is to be formed after a merger are being offered by the rivals in order to attract the attention of Vivendis board members.

On Thursday, Bouygues SA confirmed that it had raised its cash offer from 10.5 to 11.3 billion euros (15.71 billion dollars). People with knowledge of the process and the bids reported that Altice SA also raised its initial offer from 10.9 to 11.75 billion euros through its cable operator Numericable Group SA. Altice SA, however, refused to make any comments on the situation. Vivendi SA also declined to comment.

The board of Vivendi SA has scheduled a meeting today. It is expected to discuss the offers of Altice and Bouygues, each amounting to more than 20 billion dollars, as well as a third case scenario, which includes the original idea of the SFR units spin-off.

Vivendi faces a tough decision, because the company has been recently put under pressure by French regulators, who shared their beliefs that reducing the network operators in the country from four to three would reduce competition and have a negative impact.

Vivendi SA fell by 0.33% by 9:41 GMT in Paris to 19.80 euros per share, marking a one-year change of +18.88%. The company is valued at 26.50 billion euros. According to the Financial Times, the 21 analysts offering 12-month price targets for Vivendi SA have a median target of 21.80 euros, with a high estimate of 27.00 euros and a low estimate of 15.00 euros. The median estimate represents a 9.71% increase from the previous close of 19.87 euros.

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