France Telecom seeks $42B takeover of TeliaSonera

The Swedish telecom immediately dismissed the bid as to low, sending it shares jumping nearly 7 percent to 57.25 kronor ($9.48) with some analysts in agreement.

France Telecom stopped short of making a formal offer, but made an "indicative proposal" of 56.225 Swedish kronor ($9.36) a share.

In a proposal sent to the board and the company's two largest shareholders, the deal would entail cash--equivalent to $10.43 per share--and stock based on an exchange ratio of three newly issued France Telecom shares for every 11 TeliaSonera shares.

Stockholm-based TeliaSonera said in a statement that its board unanimously rejected the offer that "substantially undervalues the company."

Analysts noted that TeliaSonera's main shareholders--the Swedish and Finnish states--had indicated openness to a buyout, but not on the cheap.

Sweden's Financial Markets Minister Mats Odell, speaking to reporters in Stockholm, said the proposal "doesn't correspond to (TeliaSonera's) full value potential."

However, he expressed openness to a tie-up with another "large operator."

"We have a consolidation going on in the European telecom market and TeliaSonera needs to be part of that in different ways," he said.

Finnish Defense Minister Jyri Hakamies, who is responsible for state-owned companies, said his government is evaluating the proposal. "It's early yet and there may be new offers in the future," he said in a statement.