Bouygues Telecom Thursday made a 14.5 billion euro ($19.9 billion) offer for Vivendi's SFR unit in a deal that could create a new French telecoms powerhouse amid a wave of consolidation in the sector.
Bouygues Telecom said its offer, which includes 10.5 billion euros in cash and 46 percent in new capital, would involve no forced redundancies and would "revitalise" employment in France's telecoms sector.
The new company would be floated as soon as the merger is completed. Vivendi would then be offered the opportunity to monetise a further 15 percent of the capital and would be free to sell up at any stage.
Bouygues Telecom predicted the deal would generate around 10 billion euros in synergies, 80 percent of which would be achieved in three years. Post-synergies, it estimated SFR would be worth 19 billion euros.
"This is the best project for French consumers, French infrastructure, and the shareholders of Vivendi and Bouygues," said group finance director Philippe Marien.
If approved by anti-trust regulators, the new company would potentially create a phone carrier that would rival market leader Orange.
Shares in France's largest mobile network jumped Thursday after Orange said its net profit more-than doubled to 1.9 billion euros last year, up from 820 billion in 2012.
Financial director Gervais Pellissier said on a conference call the rise was driven by "the evolution of telecom asset prices," which has helped to reduce Orange's impairment charges.
It also comes amid a wave of consolidation in France's telecoms sector.
Earlier this week media agencies reported Altice, the parent company of cable operator Numericable, has also made a bid for SFR valuing the company at around 15 billion euros.
Altice has made no public statement on the reports
Bouygues Telecom said its proposed merger with SFR would create the largest mobile network and second-largest fixed network in France. It also pledged to double investment in France's optical fibre network to 400 million euros a year.
Marien also pledged to protect SFR employees during the merger.
"At this stage, we have no plans to make forced departure," he told AFP
"History shows that when Bouygues takes commitment, it sticks to it."