Martin Bouygues EN.FR +6.59% just rolled his tank onto fellow French billionaire Patrick Drahi's lawn.
French conglomerate Bouygues has made a last-minute offer for Vivendi's VIV.FR +0.88% SFR, just over a week after Mr. Drahi's Altice made its long-awaited approach for the French mobile operator.
On the face of it, there doesn't look much between the offers: both approaches value SFR at €14.5 billion ($19.9 billion), before deal synergies, in a mixture of cash and stock. But Bouygues's intervention might not be enough.
If Vivendi is in a hurry to get clear of telecoms, Altice seems to offer an easier exit for the French media group. Under Altice's offer, SFR would be merged into Paris-listed Numericable. Vivendi would end up with 32% of the enlarged company and would be free to sell its shares in the new company, after an agreed period.
Bouygues, on the other hand, wants to merge SFR with its own mobile operator, Bouygues Telecom. It would then launch an initial public offering of the new company of which Vivendi would own 46%. That would take time.
More important, Altice's combination also looks like an easier deal for France's telecom regulator to swallow. It could create a stronger competitor in broadband Internet, home phone and wireless services packages, which are becoming a bigger part of the French market. Allowing a merger of SFR and Bouygues—the second and third largest mobile operators in France by subscribers—would be an about-face for the regulator. In 2012, it opened the door to a fourth wireless operator explicitly to stoke greater competition.
True, Altice's pledges on cost savings look a tad ambitious. The cable company reckons its can save €1.2 billion a year, compared with Bouygues' €1.4 billion, but on a cost base roughly 30% smaller. At 12% of the enlarged company's operating expenses and capital expenditure, its promised savings come in well above other mobile-cable deals: Vodafone's VOD.LN +0.43% takeover of Kabel Deutschland expects to generate savings of just 3.3% of its combined costs in Germany, notes Citigroup.
But SFR has five million broadband Internet customers, compared with Vodafone's three million in Germany. Moving those subscribers onto Numericable's cable network would save on payments SFR makes to use French incumbent Orange's wires to customers' homes. Altice could also call a halt to SFR's spending on building its own fiber network in France.
Bouygues may be betting that Vivendi cares more about value, and less about speed. It is offering a larger stake in the combined company should Vivendi worry it is selling SFR at the bottom. The media company has shown considerable patience in disposing of unwanted assets in the past.
In this first skirmish, Altice looks to have the edge. But add in a mélange of French politics given Mr. Bouygues's connections and Mr. Drahi should still be prepared for a fight.