Bouygues wants at least 10-pct stake in Orange, or no deal
French conglomerate Bouygues said on Wednesday it would walk away from talks to sell its Bouygues Telecom unit to rival Orange unless it ends up with at least 10 percent of Orange's shares.
"We are interested in a stake in Orange to benefit from the market's growth," chairman Martin Bouygues said at his company's annual results presentation.
Bouygues has been in discussions since last month with Orange which wants to take over Bouygues Telecom, a move that would reduce the number of mobile operators in France's highly-competitive market to three from four.
A 10 to 15-percent stake in Orange as part of such a deal would be "entirely acceptable", Bouygues said, but there was "no question" of accepting anything less than 10 percent.
A company spokesman subsequently told AFP that Bouygues was actually targeting a 15-percent holding in Orange which it would acquire in two stages.
The first 10 percent would come from an expected Orange capital increase to which Bouygues would subscribe. The remaining 5 percent it would acquire in the open market, he said.
The two-stage approach would be made necessary by the refusal of the French government, which currently holds 23 percent in Orange, to see its holding diluted below 20 percent in the capital increase, sources close to the talks said. This meant that Bouygues would have to find the extra shares it wants elsewhere.
Martin Bouygues said talks with Orange were likely to continue for a few weeks more, but "not beyond this quarter" ending on March 31.
If talks fail, Bouygues Telecom will continue its current stand-alone strategy, Bouygues said.
Also on Wednesday Bouygues reported a net profit of 403 million euros ($443 million) for 2015, ahead of analysts' expectations and said profit margins would improve further this year.
It also announced a major cost-cutting drive for its Bouygues Telecom unit, which is to shave at least 400 million euros off overheads, it said.
© 2016 AFP