hr: Money

Amid investors’ opposition, France Telecom SA has made an offer to buy TeliaSonera AB. The said offer was for 252.5 billion kronor or approximately US$42 billion. The reason investors are opposed to this deal is that it would simply erode value.

During the previous month, approximately 9 out of 10 investors were openly against the deal between these two telecommunications companies as they could not see any real advantage to the merger, whether financial or strategic.

Photo Credit: twenty_questions

TeliaSonera and the Swedish government have jointly rejected France Telecom’s bid and in effect saying that the offer is not high enough. The Swedish company therefore is open to better offers.

France Telecom claims that the merger would have created the largest telephone company in Europe. That it has the potential of increasing customers by as much as 39 percent or 237 million that could save both companies nearly 700 million euros per year by 2013.

Having declined by 26 percent this year, France Telecom has recently incurred a 5.1 percent loss in Paris trading. The buy offer for TeliaSonera has hurt stock value and may continue to do so as bets regarding an increased bid abound. Recently France Telecom came out as the worst performing stock among 20 other European counterparts, while TeliaSonera shares soared 29 percent.

The deal has been labeled “a poor deal for both parties” or “a dreadful deal” by analysts.