wedding banns are still not published. Orange and Bouygues boards, organized Wednesday night led to the same conclusion, released Thursday, “ negotiations are not sufficiently advanced .” Both groups planned to meet Sunday their administrators again.
This is the end of these tips a “ final decision on further rapprochement project ” will be taken. In short: nothing is guaranteed and the purchase of Bouygues Telecom Orange may well not take place. Even today no one dares to imagine such a situation. A “mini” board has however held Thursday night at the incumbent, to inform further discussions. Stéphane Richard and Martin Bouygues should again be tomorrow, after the interview Thursday morning.
The issue of valuation
This extra time and these multiple appointments reflect the obstacles still to be overcome in an operation of extreme complexity, which includes four telecom operators but also the State, the main shareholder of Orange (23% of capital). It is with the government that the standoff is now engaged.
The issue of valuing the transaction continues particular problem. Bouygues has set a base price of 10 billion euros for the sale of its telecom subsidiary. The transaction will be financed in part in shares and cash. A capital increase should allow the construction group to enter the capital of the incumbent. Martin Bouygues has always claimed between 10 and 15% of capital. A compromise appears to have been found around 12%.
Directly between Macron and Bouygues
But the state, especially Bercy, still think it’s expensive paid. Especially Orange has made concessions. “ In relation to the scheme that was envisaged by Orange when he wanted to buy Bouygues Telecom already in spring 2014, the operator is below 1 billion in terms of expected value creation postoperatively says one of the protagonists. This is partly related to the social cost to Orange, which will ultimately recover much more employees than expected, Bouygues Telecom . ”
Above all, the state fears of being too diluted in the operation. No way to go below 20% of the capital. To avoid this problem, it therefore seeks to promote the best Orange. This would also have the effect of limiting the cash in hand which will be donated to Bouygues. “ Today it is played on the price and directly between Emmanuel Macron and Martin Bouygues. The first is not clear why the second would not pay the intrinsic value of Orange , “says a protagonist. “ In fact, the case could be settled in an hour if everyone was making efforts “, says another.
clauses “standstill”
“ Based on the amount received and the value for the Orange shares, Bouygues will have more or less money to pick up shares on the market later ‘, for its part decrypts a source close to the negotiations. This is crucial. Reportedly, Orange plead to price at 18 euros per share for the capital increase (representing a premium of 15% during Wednesday). The state would be greedy with a range between 20 and 22 euros.
Bercy would also impose clauses ‘standstill’ Bouygues to prevent it from rising too fast capital. It would also limit its ability to obtain double voting rights. “ The state requires Bouygues renounce the double voting rights for 10 years and wants to prevent it from rising to the Orange capital for 7 years ” argues one source. Unacceptable for Bouygues.
The discussions are even more complicated than the executive would prove more conciliatory than Bercy. “ But Macron does what he wants! ,” says one of the protagonists of the operation. An attitude which nevertheless begin to annoy the side of Matignon. “ The ambiguous position of the state raises questions Bouygues and Orange ,” says a source close to the matter. “ The President of the Republic could spell the end of recess by this weekend ,” believes another. For it is Hollande who should ultimately decide.
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