£8bn Bid Tale Has Vodafone Spinning

Growing conviction that Vodafone will make an unsolicited £8bn cash offer for French mobile phone company SFR before the end of the month sent its shares spinning downwards yesterday.

Europe's largest wireless phone group dismissed the suggestions as "mere speculation" but industry sources said Vodafone was considering every option for acquiring SFR, which is controlled by the struggling Vivendi Universal media empire.

Vodafone owns a 32% stake in SFR, its partner network in France, through a 20% direct holding and a 15% stake in Cegetel which controls 80% of SFR.

The biggest stake in Cegetel is held by Vivendi with 44%, while BT owns 26% and SBC Communications owns 15%.

BT last night repeated a willingness to dispose of its holding, while analysts said a move by Vodafone would give it an important foothold in the one big market where it does not have a large presence.

Some analysts believe a bid is likely soon after September 23 when "lock-up rights" between Cegetel shareholders expire. Under the terms of that arrangement no shares can be sold without the consent of all other parties.

Renewed talk of a bid for SFR saw Vodafone's share price fall 4.75p to 99.75p while its bonds also came under pressure. Investors are concerned that the chief executive, Sir Christopher Gent, is planning to use a near £7bn in unused borrowings, topped up by new bank finance, to make a cash offer.

Vivendi has indicated that it wants to keep SFR but is facing a break-up under the weight of £12bn in debts. New chairman Jean-Rene Fourtou will outline his strategy for the world's second largest media empire on September 25 but yesterday declined to comment.

Sources close to Vodafone said it would not be rushing into a hostile bid. "It would much prefer to achieve its aim with the consent of shareholders," said one. Christophe Cauvy, managing consultant at the Thinking Box, said a Vodafone acquisition of SFR would make excellent strategic sense.

KirchMedia of Munich has sold some of its multimedia rights in the German soccer league to Vodafone, the newspaper Handelsblatt reported yesterday.

The company, which owns a vast film library and sports rights in addition to controlling Germany's largest commercial broadcaster, ProSiebenSat.1 Media, is auctioning assets after filing for insolvency in April.