France Telecom is reportedly in talks to acquire Nordic operator TeliaSonera. In a recent conference call with journalists, France Telecom’s Finance Director Gervais Pellissier described the deal as “a strategic opportunity” and one that could be made through a combined cash and share offer. However, the company gave no timeframes for when a deal could be completed and warned the acquisition could mean it misses its debt target for the year.
TeliaSonera has a market value of around US$38 billion and is partly owned by the Swedish and Finish governments, which have 37% and 13.7% stakes in the mobile operator.
France Telecom SA on Friday confirmed its interest in Nordic operator TeliaSonera AB, but said it has yet to make a decision or start takeover talks. The French group also sought to explain the reasoning behind its newfound appetite for large-scale acquisitions in an effort to allay investors’ growing alarm.
He said the group had decided to clarify its thinking because of the 12% plunge in the share price over the past three days, and tried to reassure investors that there would be no going back to the reckless merger-and-acquisition strategy that marked the start of the millennium.
In particular, he stressed that France Telecom wouldn’t allow its ratio of debt to earnings before interest, tax, appreciation and amortization to go beyond 2.5 and would aim to bring it back to 2 within three years in case of a deal.
The Swedish company has a market value of roughly $38 billion and Pellissier said France Telecom would pay for any deal of this size with a combination of cash and shares.
