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. Last Updated: 07/27/2016

France Telecom Sale Terms Revealed




PARIS -- The second tranche of a share sale by France Telecom will be worth 50 billion to 60 billion francs ($8.9 to $10.7 billion), making it France's largest such sale if it succeeds, chairman Michel Bon said over the weekend.


If all goes as planned, the offering should raise 40 billion francs ($7.1 billion) for the French state, he said Sunday at a news conference.


French Finance Minister Dominique Strauss-Kahn announced Saturday that the French state planned to sell 50 million to 70 million of its France Telecom shares in a few weeks.


The share sale was part of a plan including a capital increase that would reduce the state's stake in the telephone group to just over 62 percent from the current 75 percent.


The decision to proceed with the share sale was also a signal from the government to financial markets.


Strauss-Kahn said in a newspaper interview published Sunday that the government's decision to go forward with the sale meant he felt the financial crisis that has been wreaking havoc on the markets was now a thing of the past.


The government had initially intended to sell a second tranche of France Telecom shares last month, but delayed the sale indefinitely due to market instability.


Strauss-Kahn told the weekly Le Journal du Dimanche that "investors have again found peace." He also said the coming sale would be the last for France Telecom as the state intended to remain the company's majority shareholder.


Bon told reporters that after the sale, employees would own 3.1 percent of France Telecom versus 2.5 percent now.


The public would own 32.9 percent after the sale, compared to 22.5 percent now, he added.


As part of the operation, Deutsche Telekom will take a 2 percent stake in France Telecom and France Telecom a 2 percent stake in Deutsche Telekom.


"This is an important step that we take today with this new operation, first of all because our partnership with Deutsche Telekom moves from one of simply cooperation to a genuine alliance in which each becomes a significant shareholder in the other," Bon said.


"In addition, because for the first time France Telecom is turning to the marketplace for the financing it needs to develop," he said.


Market analysts predict the shares will be sold at 350 to 380 francs each.


Bon said the shares were "blue chip" investments capable of continued growth because the company has little exposure in Asia, no business in Russia or Brazil, and incurs most of its non-French sales in the euro zone.