Numericable soars as Bouygues and Iliad lead European shares down from highs

French companies Iliad and Bouygues weighed on European equities yesterday, on expectations that a failed acquisition bid by Bouygues would hurt the earnings of both.

Shares in French cable company Numericable surged after it won the battle to buy Vivendi's telecoms arm SFR, in a deal which creates the second-biggest player in a reshaped French telecoms market.

Despite a sweetened, last-ditch offer from Bouygues – the outsider in the race but favoured by the French government – Vivendi said on Saturday it picked Numericable as the better bid in terms of business logic, commitment to preserving jobs, chances of regulatory approval and long-term value. "The logical choice and the choice that will allow for the development of a high-speed network in France prevailed," Numericable's billionaire backer Patrick Drahi (right) told a news conference, saying his victory was down to preparation and seven years' work on the project.

Mr Drahi said he will meet today for talks with economy minister Arnaud Montebourg, who had favoured the Bouygues offer. Mr Montebourg, a former industry minister who was promoted to be economy minister in last week's reshuffle, feared the Numericable deal would cost more jobs and spoke out during the month-long bid battle against Mr Drahi's tax status, Swiss domicile and the way Numericable is structured. But such opposition fell flat.

Bouygues fell 5.4 per cent to €29.17 yesterday and Iliad dropped 5 per cent after Numericable won a bid to acquire Vivendi’s SFR telecom unit.

Iliad investors were disappointed because Iliad had agreed to buy the Bouygues mobile network and some spectrum if Bouygues’s bid for SFR succeeded. Iliad’s decline was the biggest on the STOXX Europe 600 Technology index , which overall fell 1.9 per cent.

Bouygues had been up 12.9 per cent on the year, compared with a rise in the Euro STOXX 50 of 3.9 per cent. – (Reuters)