No rush to sell Bouygues

  • Business
  • Wednesday, 24 Feb 2016

PARIS: Martin Bouygues, asked once whether he would sell the loss-making French mobile phone business that has been his main contribution to the family empire, snapped: “And you, would you sell your wife?”

If he seals a deal with former monopoly Orange, the 63-year-old would ditch Bouygues Telecom, returning the group his father Francis founded in 1952 to its construction roots.

Yet any blow to his pride from selling the third largest mobile operator in France would be softened by a payout of about 10 billion euros (US$11.08bil) in shares and cash.

“It can’t be an easy decision. It would roughly be back to the group as inherited from his father. Martin Bouygues’ big adventure being mobile phone,” said Dominique Barjot, a historian at the Sorbonne who has written a book on Bouygues.

He said Bouygues, who declined interview requests for this story, is pragmatic enough to see that a sale makes sense after low-cost operator Iliad started a price war when it entered the mobile market in 2012.

Orange, France’s largest telecoms operator, has been in talks since early January to buy Bouygues Telecom. An initial deal could happen in March after Bouygues publishes full-year earnings on Feb 24 although Orange chief executive officer Stephane Richard said last week he only saw a 50% chance of success.

Bouygues could use cash from a deal to expand in construction, increase the family’s control as he prepared his succession, cut debt or made new acquisitions, analysts said.

Acquisitions could focus on electrical engineering, “a segment where the group lags behind rivals such as Vinci, Spie and Eiffage,” Natixis analyst Gregoire Thibault said.

But he will not rush. Bouygues board member and former Alstom CEO Patrick Kron said Bouygues, a father of three who liked hunting, took “no rash decision”.

He may decide on one of his estates, in central France.

“When things get tense, before making a decision, he drives his tractor in Sologne,” said long-time friend and lawyer Jean-Michel Darrois.

Bouygues has broken up before from companies to which he once seemed wedded. He said in a Figaro interview last year that he knew when to sell a business even if it was one he had created, citing Maison Bouygues, Bouygues Offshore, water business Saur and sports channel Eurosport.

“I took those decisions when there was a good strategic reason to do so. To paraphrase General de Gaulle, it’s not at the age of 63 that I will allow my ego to get the better of me!” The size of the stake he would gain in Orange is among the points of discussion.

The French state owns 23% of Orange’s shares and wants to keep a blocking minority. Sources close to the government have said it wanted to cap Bouygues’ stake at 10% while sources close to Bouygues have said they wanted a 15% stake.

Bouygues also needs help from younger rivals Xavier Niel of Iliad and Patrick Drahi of Numericable-SFR. Orange has started talks with them about assets sales to satisfy competition concerns as the tie-up would create a giant with a market share of close to 50%. — Reuters

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