Out-Law News | 02 Apr 2014 | 3:54 pm | 3 min. read
The move comes after the French stock markets' regulatory body, the Autorité des marches financiers (AMF) called for more transparency between the four firms involved in discussions for the takeover of SFR. AMF chief Gerard Rameix had asked Vivendi, cable firm Numericable, its parent firm Altice and rival bidder Bouygues for details of the financial compensations planned in the event that the takeover talks fail, as well as details of the conditions in which Vivendi could exit from the capital of the future merged company, according to Reuters news agency.
"I understand that for the various players, giving information or not is part of a strategy," said Rameix in an interview with the website of the French newspaper Le Figaro. "But we want to ensure that the market has full and precise information."
Rameix's statement followed a month of negotiations over the future of SFR, which is France's second-largest mobile operator. Legal experts have described the statement as "an unusual step" in a process which has already attracted comment from some quarters, after the French industry minister Arnaud Montebourg publicly backed the Bouygues bid.
According to the Financial Times Vivendi is seeking a quick sale of SFR so that it can focus on its television and recorded music business. After considering the Numericable and Bouygues bids, Vivendi entered three weeks of exclusive talks with Numericable which are due to end on 4 April. But Bouygues yesterday revised its offer for SFR, according to the Financial Times, extending the deadline of the offer from 8 to 25 April and including a €500m break-up fee which would be payable to Vivendi should French regulatory authorities block the proposed merger between its telecoms unit and SFR. The sale of SFR would reduce the number of players in the French telecoms market from four to three, and a sale to Bouygues would create France’s largest mobile carrier with an estimated 42.5 per cent of the market, the Financial Times reports.
Diane Mullenex, of Pinsent Masons, the law firm behind Out-Law.com, said that the AMF statement and the Vivendi sale highlight the fine balance companies must strike between complying with regulatory disclosure obligations and confidential business negotiations.
SFR is not a publicly listed company, so is not subject to AMF rules and regulations, however its parent company Vivendi and both of the bidding companies are listed. French law obliges listed companies to provide the market with "exact, precise and sincere" information, according to the AMF. The AMF also highlighted that the parties could face sanctions if they fail to comply with market regulation.
Mullenex said: "It is very unusual for the AMF to put out a statement like this. Usually the AMF puts out a press release such as this when they believe the rules and regulations are not being abided by. SFR is not a listed company so is under no obligation to disclose any information. But the three actors involved in the takeover talks are all quoted companies, so they are obliged to put information to the market about this."
"AMF has noticed that there have been rumours outside the market and that the government has been aware of information before it has been publicly stated. There is a need to balance the issue of listed companies complying with disclosure of information obligations and the need for confidentiality during such negotiations. Of course, the more confidentiality the better," said Mullenex.
"There is also a competition issue related to this sale," Mullenex said. "There will be fewer players in the market. What will be the end benefit to the end user?"
Ahead of today's revised bid, a spokesman for Bouygues, whose bid is backed by France's state fund CDC, said the company was surprised by the AMF's comments. Bouygues has commented on the talks a number of times and complained that Altice-Numericable have not been so transparent, reported the Financial Times. "Bouygues has regularly communicated on the content of its offers, in contrast with Altice-Numericable," a spokesman told the newspaper. Neither Altice, Numericable's parent company, nor Vivendi made immediate public comments to the statement.
Altice plans to merge SFR with its Numericable arm, and has offered Vivendi €11.75 billion in cash and a 32 per cent stake in the resulting company. According to the Financial Times Vivendi hopes the Altice offer presents a swift exit strategy, amid concerns that an attempted sale to Bouygues could be delayed by investigations by the French competition authorities.