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France Telecom's Latest Effort To Buy TeliaSonera Collapses

France Telecom and Sweden's TeliaSonera would have presented a major competitive threat to Vodafone Group and Deutsche Telekom in Europe.
The French don't do it any better than the Americans when it comes to big hostile takeovers: France Telecom SA dropped its effort to acquire TeliaSonera AB on Monday, dashing plans to create the largest telecommunications network operator in Europe.

Both firms are major suppliers of Apple's iPhone and, while they offer mobile phones from other manufacturers, a France Telecom-TeliaSonera combine would have represented a potent end user supplier of iPhones ranging from the Arctic Circle to the Indian Ocean.

France Telecom and its major Orange brand and Sweden's TeliaSonera would have presented a major competitive threat to Vodafone Group and Deutsche Telekom in Europe.

France Telecom had been sending takeover feelers out to TeliaSonera since April, but it wasn't until the French firm offered to put up some cash that the Swedish firm sat down at the negotiation table. But then the negotiations collapsed.

In a statement Monday, the French company said: "France Telecom has today decided not to submit a firm offer to TeliaSonera's shareholders. Notwithstanding the interest shown in the project, the dialog opened with the board of directors of TeliaSonera was unable to reach agreement on its financial condition."

In its reply, TeliaSonera said it believed the France Telecom "proposal substantially undervalues the company."

After the announcements, France Telecom stock jumped 8.8% and TeliaSonera dropped 14% in early stock market trading. Prior to the Monday announcements, France Telecom stock had been falling while TeliaSonera was rising in anticipation of the acquisition being successful.

The France Telecom-TeliaSonera deal had some similarities to Microsoft's abortive attempt to acquire Yahoo in the United States. In each case, no competing suitors materialized and both acquisition efforts failed.