The 62.5-metre "Baton Rouge" was built by the Netherlands-based Icon Yachts and employs a crew of 16, according to Challenges. Fitted out with a dance floor, pool and bar, it had been rented out for 455,000 euros a week.

A spokesman for Martin Bouygues's construction-to-telecom conglomerate Bouygues SA (BOUY.PA) would not comment on the report, saying the yacht was part of the chief executive's private life.

A sale would come as the Bouygues group is being hit hard by low-cost mobile phone competitor Iliad (ILD.PA), which has sparked a price war in the sector in France. The company posted sharply lower first-half earnings late on Tuesday.

Martin Bouygues and his brother control 21 percent of the company founded by their father in 1952. The pair have slipped down in Challenges magazine's rankings of France's richest people in the past year to the 35th spot, with net worth of 1.4 billion euros, as the value of their Bouygues stake has shriveled.

"The state picked our pockets in the spectrum auction last year and a month later they smashed us with the arrival of the fourth mobile player," Martin Bouygues lamented at a news conference on Wednesday.

Bouygues shares have plummeted from peaks around 67 euros seen in 2007 and were trading at 20.285 euros by 1246 GMT, down 7.4 percent in reaction to the company's latest figures.

Iliad's arrival in the French mobile sector was approved under former President Nicolas Sarkozy despite his close friendship with Martin Bouygues, who was a witness at his wedding in 2008 and is godfather to one of his sons.

Iliad founder Xavier Niel now owns France's 12th biggest fortune, just behind tycoon Vincent Bollore on whose yacht Sarkozy famously vacationed after his election in 2007.

Another luxury yacht, belonging to entrepreneur Stephane Courbit who built his fortune in television, sank off the coast of Greece in February. A video of the wreck proved popular with the recession-weary French when it went viral on the Internet. (Reporting by Leila Abboud)

• A Permanent Economic Emergency