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Equant purchase mulled
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October 10, 2000: 5:06 p.m. ET
Report: France Telecom close to acquiring Dutch phone carrier Equant
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NEW YORK (CNNfn) - In the wake of broken merger talks with Internet company Infonet Services Corp., Dutch phone carrier Equant has reportedly reentered merger discussions with telecom provider France Telecom SA.
According to Tuesday's interactive edition of the Wall Street Journal, Equant is on the verge of a complex buyout agreement that would value the Amsterdam-based communications provider at about $10 billion. French daily La Tribune first reported the talks early Tuesday.
Citing people familiar with the matter, the publication said the agreement would fold Equant into France Telecom's Global One international telecommunications venture, and a deal could be announced as early as next week.
Equant and France Telecom reportedly discussed a merger earlier this summer, but broke off talks when the two sides could not come to terms on a price, the Journal said. The negotiations come just days after Equant and El Segundo, Calif.-based Infonet (IN: Research, Estimates) broke off their merger discussions because of a dispute over the price.
A multi-step deal
To acquire Equant, France Telecom would set into motion a multi-step transaction, the Journal said. First, the Paris-based company would agree to pay off Global One's $1.2 billion long-term debt, and Equant would then acquire Global One for stock.
Finally, France Telecom would purchase a 35 percent stake in Equant currently owned by SITA, a consortium of the world's biggest airlines, using stock that SITA could then convert into cash within 18 months, the publication said.
SITA, Equant's founder and largest shareholder, is reported to have demanded cash for its stake, which led to the collapse of the Infonet deal.
The net result would give France Telecom a controlling position in Equant and, therefore, Global One, although it would not technically own either company.
It was not immediately clear whether France Telecom was prepared to offer similar buyout terms to Equant shareholders that own the remaining 65 percent of the company's stock, however. That group remains a powerful voting block that could scuttle any agreement.
The Journal said France Telecom may offer Equant's minority shareholders warrants that could be converted to cash -- for up to half their shares -- in about two years.
The American depositary shares of Equant (ENT: Research, Estimates) fell $2.12 to $34.88 Tuesday while France Telecom's (FTE: Research, Estimates) ADRs tumbled 7 percent, or $6.88, to $89.25. 
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Equant
France Telecom
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