PARIS (AFP) - France Telecom offered 33 billion euros (51 billion dollars) Thursday for Swedish-Finnish operator TeliaSonera in a bid to create the worlds fourth-biggest mobile operator but the proposal was immediately rejected.
The Nordic operator dismissed the offer as "significantly" undervaluing the company, a view shared by the Swedish government, which holds 37.3 percent in TeliaSonera. Analysts said counter bids for TeliaSonera were now possible.
"My preliminary conclusion is that the bid from France Telecom does not correspond to TeliaSoneras full potential and worth," Swedish Finance Minister Mats Odell said.
Finland, which holds 13.7 percent of the company, said that while it would review France Telecoms bid, it expected other offers to be tabled.
"This is typical of a process that is still in its initial phase and we may expect new offers in the future," Defence Minister Jyri Haekaemies, who is also responsible for Finnish state ownership, said in a statement.
France Telecom said the deal would create a company spanning 30 countries with 237 million clients -- 168 million for mobile phones and 69 million for fixed line services.
"The combination between the two groups would create the number four worldwide telecom operator," a company statement said.
France Telecom chief executive Didier Lombard told a conference call the company would wait 15 days to see how its "friendly approach" fared before deciding whether or not to make a formal bid.
This would give enough "time to bring views together," Lomabrd said, adding: "I do not believe that the situation is blocked."
The France Telecom offer comprises 52 percent cash and 48 percent in shares, with the cash component pitched at 63 Swedish kronor (6.7 euros, 10.4 dollars) per share and the share component at 56.2 kronor.
It offered three new France Telecom shares for 11 existing TeliaSonera shares, with a cash guarantee option for all shareholders for their first 500 shares tendered.
A spokeswoman told AFP that this valued TeliaSonera at 32-34 billion euros.
Analysts said they believed the offer was too low and could be an opening shot in a battle for control of TeliaSonera which may draw in other companies such as Germanys Deutsche Telecom and Norways Telenor.
"The bid only really values TeliaSonera at 56 Swedish kronor per share which is too low ... I thought that there would be more cash involved," one Stockholm based analyst said.
"I believe this bid is only an opening negotiating gambit from France Telecom," he added.
Analysts at the SEB Enskilda brokerage said "a bid would have to be above 60 kronor to be attractive enough for Teliasoneras shareholders ... At this low level, we would not rule out other bidders."
At investment bank JP Morgan, analysts said they believed that France Telecom was able to raise its offer.
"We sensed France Telecom is not ruling out increasing the offer," they said.
TeliaSonera has a strong presence in the Scandinavian and Baltic regions, as well as Russia, where France Telecom is not well represented.
The group was formed in 2002 by the merger of Swedens Telia and Finlands Sonera.
France Telecom said Thursday the combined company would be a "well-balanced portfolio between developed and emerging markets."
Chairman of TeliaSonera, Tom von Weymarn, said in a statement that the group was "a strong business with excellent growth prospects in its own right."
In late trade Thursday, TeliaSonera shares were up 7.91 percent at 58 Swedish kronor and the OMX Stockholm All Share was down 0.18 percent.
France Telecom was down 5.49 percent to 18.175 euros in Paris where the overall market was off 0.41 percent.
The Nordic operator dismissed the offer as "significantly" undervaluing the company, a view shared by the Swedish government, which holds 37.3 percent in TeliaSonera. Analysts said counter bids for TeliaSonera were now possible.
"My preliminary conclusion is that the bid from France Telecom does not correspond to TeliaSoneras full potential and worth," Swedish Finance Minister Mats Odell said.
Finland, which holds 13.7 percent of the company, said that while it would review France Telecoms bid, it expected other offers to be tabled.
"This is typical of a process that is still in its initial phase and we may expect new offers in the future," Defence Minister Jyri Haekaemies, who is also responsible for Finnish state ownership, said in a statement.
France Telecom said the deal would create a company spanning 30 countries with 237 million clients -- 168 million for mobile phones and 69 million for fixed line services.
"The combination between the two groups would create the number four worldwide telecom operator," a company statement said.
France Telecom chief executive Didier Lombard told a conference call the company would wait 15 days to see how its "friendly approach" fared before deciding whether or not to make a formal bid.
This would give enough "time to bring views together," Lomabrd said, adding: "I do not believe that the situation is blocked."
The France Telecom offer comprises 52 percent cash and 48 percent in shares, with the cash component pitched at 63 Swedish kronor (6.7 euros, 10.4 dollars) per share and the share component at 56.2 kronor.
It offered three new France Telecom shares for 11 existing TeliaSonera shares, with a cash guarantee option for all shareholders for their first 500 shares tendered.
A spokeswoman told AFP that this valued TeliaSonera at 32-34 billion euros.
Analysts said they believed the offer was too low and could be an opening shot in a battle for control of TeliaSonera which may draw in other companies such as Germanys Deutsche Telecom and Norways Telenor.
"The bid only really values TeliaSonera at 56 Swedish kronor per share which is too low ... I thought that there would be more cash involved," one Stockholm based analyst said.
"I believe this bid is only an opening negotiating gambit from France Telecom," he added.
Analysts at the SEB Enskilda brokerage said "a bid would have to be above 60 kronor to be attractive enough for Teliasoneras shareholders ... At this low level, we would not rule out other bidders."
At investment bank JP Morgan, analysts said they believed that France Telecom was able to raise its offer.
"We sensed France Telecom is not ruling out increasing the offer," they said.
TeliaSonera has a strong presence in the Scandinavian and Baltic regions, as well as Russia, where France Telecom is not well represented.
The group was formed in 2002 by the merger of Swedens Telia and Finlands Sonera.
France Telecom said Thursday the combined company would be a "well-balanced portfolio between developed and emerging markets."
Chairman of TeliaSonera, Tom von Weymarn, said in a statement that the group was "a strong business with excellent growth prospects in its own right."
In late trade Thursday, TeliaSonera shares were up 7.91 percent at 58 Swedish kronor and the OMX Stockholm All Share was down 0.18 percent.
France Telecom was down 5.49 percent to 18.175 euros in Paris where the overall market was off 0.41 percent.
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