France Telecom expresses interest in TeliaSonera
France Telecom said it was interested in Swedish-Finnish firm TeliaSonera but added that no talks had been opened yet.18 April 2008
PARIS - France Telecom said Friday it was interested in Swedish-Finnish firm TeliaSonera but added that no talks had been opened with the company at this stage.
Meanwhile in Stockholm, TeliaSonera said it would look at any offer from France Telecom in the best interests of its shareholders.
It declined further comment.
In a statement, France Telecom said that in light of market speculation about its intentions, it wanted to "clarify that these rumours do not reflect the current ... situation."
It said it was confirming its "interest" in TeliaSonera but that there were "no negotiations at this stage."
France Telecom finance director Gervais Pelissier told a conference call that any deal would be funded through cash and debt and that to maintain shareholder support the dividend ratio would be maintained or increased.
The group's shares have lost over 10 percent in the last two days since a report in Le Figaro Wednesday cited unnamed sources as saying a EUR 33.6-billion deal would be announced in the coming weeks.
France Telecom on Friday was showing a loss of 2.57 percent at EUR 19.35 in mid-morning trading on a generally stronger Paris market.
"Stock markets have scant hope in a merger with TeliaSonera as it would likely be carried out via a share swap and that could penalise shareholders financially," said analysts at financial management group Aurel.
In addition, "a political solution would be imperative, given the presence of governments (French, Finnish and Swedish) in the companies," they said.
The Swedish state owns 37.3 percent of TeliaSonera and Finland 13.7 percent while the French government holds 27.3 percent of France Telecom.
Pelissier rejected criticism of the mooted deal and insisted that opportunities "still exist" in both mature and emerging markets.
He said France Telecom and TeliaSonera were "in fact two complementary groups, adding that "exploratory steps have been taken."
The company's statement said a deal "could only occur with strict respect for France Telecom's commitments regarding its medium-term debt ... and its cash dividend policy."
While analysts have described a tie-up with TeliaSonera as lacking in synergies and carrying significant execution risks Pelissier insisted that opportunities "still exist" in both mature and emerging markets.
[AFP / Expatica]