NEW YORK (The Deal) -- French building and telecoms conglomerate Bouygues has rejected Patrick Drahi's €10 billion ($11.2 billion) bid for Bouygues Telecom, claiming the business is poised for strong growth and that a takeover would struggle to get past regulators.
Bouygues board issued its verdict on the bid late on Tuesday, following an hours-long meeting to consider the merits of Drahi's plan to combine his Numericable-SFR operation with Bouygues Telecom to create France's largest mobile services provider.
"The board is convinced that the telecoms market is at the dawn of a new era of growth [and] that Bouygues Telecom is particularly well positioned," Bouygues said. "The offer represents significant execution risk ... particularly in terms of competition law in both the fixed and mobile markets."
Bouygues also cited the job losses that would arise from the deal as a reason for its rejection. Numericable-SFR is France's No. 2 mobile service provider, ahead of Bouygues Telecom and behind Orange (ORAN).
Shares in all of France's major telecoms companies tumbled Wednesday. Investors had pinned their hopes on a deal that would reduce the number of mobile and Internet service providers in France from four to three, easing the competitive pressures that have made the country one of Europe's least profitable telecommunications markets.
The rejection will, however, please the French government, which had rallied against a deal, claiming it would cost jobs, increase costs for consumers and hurt investment in the sector. France is preparing to auction 4G mobile spectrum and has already budgeted for €2.5 billion from the sale, which would have been adversely affected by the combination of two of the four bidders.