France's industrial renewal minister Friday threw a spanner in cable operator Numericable's multi-billion-euro bid for telecoms group SFR, as he challenged the company and its billionaire chairman over their holdings in tax havens.
Numericable through its parent company Altice has offered 10.9 billion euros and a 32 percent stake in the new company for Vivendi's SFR, currently France's second-largest mobile network.
It is facing competition from construction and telecoms group Bouygues which has offered 11.3 billion euros and 43 percent of the new company, valuing SFR at 15.5 billion euros.
But just hours before Vivendi is due to announce its choice, Industrial Renewal Minister Arnaud Montebourg said: "The managers of Vivendi have decided to sell SFR to Numericable at all costs."
The choice "poses a certain number of problems and questions", chief among which is Altice's holdings in Luxembourg and the tax status of its chairman Patrick Drahi, he said.
"There is a tax problem because Numericable has a holding in Luxembourg, the company is listed on the Amsterdam stock market, his personal holding is in Guernsey in a tax paradise of Her Majesty the Queen of England, and he himself is a Swiss resident."
"Mr Drahi will have to repatriate all of his possessions and assets to Paris, to France," the minister told Europe 1 radio.
The French government, which is struggling to bring down its public deficit, has been bluntly critical of citizens who keep their assets in tax havens like Switzerland, Luxembourg or Guernsey.
Vivendi's management is due to meet Friday over the sale.
It has several options to consider -- selling the unit to one of the two contenders; delay its choice in the hopes that the price war will heat up or list its telecoms subsidiary on the stock market.