Bloomberg News

Apax Said in Talks to Buy France Telecom’s Orange Suisse Unit

January 04, 2012

Dec. 23 (Bloomberg) -- Apax Partners LLP is entering exclusive talks to buy France Telecom SA’s Swiss mobile-phone unit in a deal that may be valued at about 2 billion euros ($2.6 billion), three people familiar with the matter said.

France Telecom may announce the discussions on Orange Suisse as soon as today, said one of the people, who declined to be identified as the matter is private. The London-based buyout firm beat out bids from EQT Partners AB, Providence Equity Partners Inc. and French telecommunications billionaire Xavier Niel, two of the people said.

France Telecom is shedding assets in Europe, where multiple phone companies are vying for a shrinking pool of new customers, to embrace faster-growing markets in Africa and the Middle East. The Paris-based mobile operator, France’s largest, is also in talks to sell its Orange Austria unit to Hong Kong-based Hutchison Whampoa Ltd., people familiar with the situation said in October, and is planning to exit Portugal.

“It makes sense to exit the difficult Swiss market and may give them more flexibility on the cash-flow side,” said Giovanni Montalti, a London-based analyst at Credit Agricole Cheuvreux, who rates the stock “underperform.” “If they enter exclusive talks today and deliver the deal by the end of the year, that would be quite fast.”

Perella Weinberg Partners LP and Lazard Ltd. are advising France Telecom on the Swiss sale. Spokesmen at France Telecom and Apax declined to comment, and officials at EQT and Providence couldn’t immediately be reached for comment by telephone.

Apax’s History

Apax, run by Martin Halusa, has participated in more than 20 deals this year, including last month’s purchase of U.S. wound-treatment company Kinetic Concepts Inc., its largest in 2011, according to Bloomberg data. The firm has amassed about half the 9 billion euros it’s seeking for its latest fund, three people with knowledge of the plans said this month.

The decision by France Telecom to pursue a sale of the Swiss unit to Apax follows last year’s bid to merge the business with rival Sunrise, a deal rejected by regulators. Sunrise’s owner, CVC Capital Partners, was earlier excluded from the sale process for Orange Suisse, although the firm discussed assisting Providence with arranging financing in the hopes of attempting another merger, according to people with knowledge of the talks.

France Telecom rose 0.8 percent to 11.97 euros in Paris trading today. The shares have sunk 23 percent this year, valuing the company at about 32 billion euros.

The French phone company, led by Chief Executive Officer Stephane Richard, said Oct. 27 that third-quarter profit fell 6.2 percent as a revenue decline at home overshadowed growth in Spain and some African countries. The company said then that full-year operating cash flow will be “slightly” more than 9 billion euros, compared with a previous forecast of that amount.

Almost half the mobile operator’s 45.5 billion euros in sales last year came from France. In October, France Telecom agreed to acquire Congolese mobile operator Congo-China Telecom, entering its third new country in about a year.

--With assistance from Jacqueline Simmons in Paris. Editors: Julie Alnwick, Elizabeth Wollman

To contact the reporters on this story: Matthew Campbell in Paris at mcampbell39@bloomberg.net; Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net

To contact the editor responsible for this story: Jacqueline Simmons at jackiem@bloomberg.net


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