Altice share price soars, confirms bid for Bouygues Telecom

European telecom group Altice confirmed on Monday recent reports that it has offered to acquire France’s Bouygues Telecom in a deal that would create the countrys largest operator by subscribers.

Luxembourg-based Altice, controlled by telecoms tycoon Patrick Drahi, has launched the bid through its subsidiary Numericable-SFR, but didnt specify how much the offer amounted to. The proposal is valued at €10 billion, according to a person familiar with the matter.

In a separate statement, family-controlled conglomerate Bouygues confirmed that it has received an “unsolicited” offer for its telecom unit but no negotiations were currently in progress. Bouyguess board will meet on Tuesday to discuss the offer, it said.

Bloomberg reported that Altice has secured financing for the bid with a loan from banks including BNP Paribas SA and JPMorgan Chase & Co, adding that Mr. Drahi has decided to act quickly amid concerns of possible interest rate increases tied to Greek bailout talks and market volatility in the area.

Mr. Drahi plans to merge Bouygues into Numericable-SFR and form a company with more than 30 million mobile subscribers, overtaking state-backed Orange SA as Frances biggest telecom company in terms of subscribers and reducing the number of players in Europes third-largest telecom market to three.

However, any deal for the carrier is expected to face resistance by the French government, which has opposed consolidation in the sector over concerns of its impact on employment and investment in communications infrastructure.

Acquiring Bouygues Telecom would allow Altice to achieve massive cost savings in areas including network investments, marketing and information technology, as well as to cut staff and rationalize stores. The deal would bring synergies of €850 million euros per year, according to Berenberg analysts.

French Economy Minister Emmanuel Macron said on Sunday that the time “isnt right for opportunistic mergers that could benefit some but arent in the public interest”, adding that investment, employment and “giving customers the best possible service should be the priority”.

Seeking to calm competition concerns, Numericable-SFR and low-cost operator Iliad confirmed they are in exclusive talks over selling parts of Bouygues’s telecom network and spectrum to Iliad, if the primary deal gets the green light.

Last week, Margrethe Vestager, European Commissioner for Competition, said that she may take a tougher stance than her predecessor on the recent wave of mergers in the telecommunications sector. The combined entity will likely need to sell some assets for the deal to secure regulatory approval, people with knowledge on the negotiations said.

Altice SA surged 21.46% to €139.80 per share by 09:33 GMT in Amsterdam, marking a year-over-year jump of 163.67%. The telecom group is valued at €28.54 billion. According to the Financial Times, the 10 analysts offering 12-month price targets for Altice SA have a median target of €108.00, with a high estimate of €160.00 and a low estimate of €88.00. The median estimate represents a 6.17% decrease from the previous close of €115.10.