Orange and Bouygues announced Friday, in two releases, the “end of discussion” for the redemption of the telecom subsidiary of the industrial group by the incumbent, explaining that an “agreement for a reconciliation n has been found. ” “After three months of discussion with Orange, an agreement could be reached. Accordingly, the Board of Directors of Bouygues has decided unanimously to terminate negotiations, “said the industry group said in a statement.
” After extensive discussions, the Council Orange administration found that an agreement for a merger with Bouygues Telecom could not be found. It was therefore decided to terminate the discussions, “confirmed his side the former monopoly Orange. Several obstacles had appeared in the final stretch of the negotiations, particularly regarding the valuation of the two operators and the risk to the Bouygues group for a possible non-completion of the transaction, suspended from a green light from the Authority of competition.
blockages linked to the State
“the state wants the Orange shares are valued at a price above the market by imposing very strict conditions equity ownership Bouygues “explained earlier Agence France-Presse a source close to the case, judging these difficult conditions acceptable to the industry group. Bouygues hoped to sell its telecom subsidiary for about 10 billion euros, the amount had put on the table Patrick Drahi at a bid last year, which was rejected.
The State, whose participation in the capital of Orange, currently 23%, should be diluted once the agreement, contested this valuation and wanted to scale back. Another sticking point, the will of the State that Bouygues could increase its stake in Orange capital for several years and gives up its double voting rights, over a long period, which would have limited facto influence within the incumbent.
“contractual Monster”
the Economy Minister Emmanuel Macron, in charge of negotiations “did his business banker” while François Hollande and Manuel Valls “wanted it to be done to boost investment in fiber”, has qualified a close source. The operators also had to allocate nearly 8 000 employees of Bouygues Telecom, while the State insisted that the operation is done without any layoffs.
While the partners accuse each other of failure of discussions, the result is that the rapprochement that would have to increase the number of operators in France from four to three, and they called all their wishes, will not happen. “It had reached such a level of complexity that it failed. It resulted in a contractual monster with too large uncertainties in terms of competition, Bouygues has found the end it was too risky, “argued another source close to the negotiations.
Bouygues difficulties
According to a union, contacted earlier by Agence France-Presse, “Martin Bouygues is able to say no if he does not get what he wants. The risk of non-completion of the transaction is important and if poorly considered, Martin Bouygues will not take. ” While the partners blame each other for the failure of the talks, the result is that the rapprochement that would have to increase the number of operators in France from four to three, and they called all their wishes, not not happen.
the discussions between Orange and Bouygues, officially launched on January 5 were originally to end on March 31, but the boards of both groups were given until weekend -end to come, to resolve past difficulties. While the other three operators have adjusted their accounts, Bouygues Telecom, which widened its loss to 59 million euros last year, will be worth to continue its path independently, and will work hard to motivate his troops after a long period of uncertainty for employees.
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