The auction for France Telecom’s 54 per cent stake in PagesJaunes reaches a critical point on Monday when bidders are expected to submit binding offers for the French directories business.

An agreed offer for the France Telecom stake is likely to trigger a full offer for PagesJaunes, which is listed on the Paris exchange with a market value of more than €6.7bn ($8.5bn).

France Telecom mandated Merrill Lynch and French boutique Toulouse et Associés earlier this year to run the sale process. The French telecoms business is understood to be keen to secure an agreement to sell its stake by July 27 when it presents its first-half results.

Bankers involved in the process said the auction remained “fluid” with a number of parties dropping out, potentially new parties emerging, and the composition of existing bidding teams changing.

However, they cautioned that France Telecom may also struggle to achieve a price higher than PagesJaunes’ Friday stock market trading price of €24.16.

“That is already a very full price. I would be surprised if bidders will bid above the market,” one said.

Those expected to submit firm offers include Vivendi, the French media and telecoms group which would be attracted by PagesJaunes’ internet activities. As well as the online version of its traditional telephone directory, PagesJaunes also owns, a popular mapping service.

A source close to Vivendi said was an attractive website from a commercial point of view because of the listing fees paid by local businesses, which offered a clear source of cash in an industry that can still struggle to “monetise” page views.

Other likely bidders include Texas Pacific Group, the buy-out group; while US rival Kohlberg Kravis Roberts had earlier teamed up with Axa Private Equity to express its interest.

The buy-out arm of Goldman Sachs has since joined forces with KKR and Axa, according to one banker.

The continuing interest of Eurazeo, the French investment group, is unclear, following a suggestion it had dropped out. Other interested parties have included BC Partners and PAI.

PagesJaunes produced sales of €1.06bn in 2005, an underlying increase of 6 per cent on 2004. Net profit rose by an underlying 23 per cent to €262m. In 2006, it said it is looking for underlying sales growth of 6.5-8.5 per cent.

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