TeliaSonera has rejected out of hand a 282.9 billion kronor (£24 billion) offer from France Telecom, saying the cash-and-shares bid was “significantly below” the company’s value.

The proposed deal, revealed by France Telecom this morning, would create the world's fourth largest telephone company.

In a statement, France Telecom, said it had made an indicative 56.23 Swedish crown per share cash-and-stock offer for Nordic telecoms operator.

However, TeliaSonera immediately rebuffed the approach. Tom von Weymarn, the company’s chairman, told Reuters: "As we understand this, they have made an offer in the range of 56 to 57 Swedish crowns per share, and that is significantly below the company's real value.

“Therefore, we as a board won't be able to support this move."

TeliaSonera made its rejection, despite the fact that the Swedish government has pledged to sell its 37.3 per cent stake as part of the country’s privatisation programme.

The Finnish government also owns 13.7 per cent of TeliaSonera.

France Telecom said it would only proceed with a friendly takeover and would list shares in Stockholm and Helsinki after the proposed purchase.

Buying the Swedish telephones group would be France Telecom’s biggest deal since it bought Orange, its mobile telecoms arm, for £27.8 billion in 2000. A successful deal would create a worldwide leader in convergent communications, the global number three in fixed broadband and number four in mobile, said the French telecoms group.

The price offered is 26 per cent above TeliaSonera's closing stock price on April 15, the day before France Telecom's interest in buying TeliaSonera became public.

Analysts have been openly critical of the possible merger, suggesting that the French group is paying too high a premium for the Swedish company and that there is little logic in the transaction. They point out that there is little overlap between the two groups, whose core operations lie in mature western markets.

France Telecom's shares have fallen around 13 per cent since April when its interest in a potential deal became known.

Didier Lombard, chief executive of France Telecom, said that he was not surprised that his approach had been rejected at this stage.

Mr Lombard said he would not change the make up of the cash-and-shares offer but said that the company may be prepared to alter certain “non-monetary” elements of the scheme.

He said analysts would come to appreciate the logic of the deal over time.

If the deal goes through, the new company would have 237 million subscribers, of which 168 million would be mobile-phone customers and 69 million would be fixed-line users.

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