In a move that it says underlines its commitment to Brazil, Spanish telco Telefónica and Telefónica Brasil have submitted an offer to Vivendi for the combination of Telefónica Brasil and Global Village Telecom (GVT), which includes a cash consideration of 11.962 billion Brazilian Reais and newly issued shares representing 12 per cent of the share capital of the new Telefónica Brasil, after its combination with GVT.
Considering the current market price of Telefónica Brasil the offer amounts to a total of 20.1 billion Brazilian Reais (equivalent to €6.7 billion at current exchange rates). The cash consideration would be financed via a capital increase at Telefónica Brasil subscribed by Telefónica S.A. in proportion to its current stake (74 per cent), whose contribution will be funded, in turn, via a capital increase.
The offer envisages that, should Vivendi be interested in acquiring a stable stake in Telecom Italia, Telefónica could offer Vivendi the acquisition, in cash, of up to 1.11 billion ordinary shares of Telecom Italia, currently representing a stake of 8.3 per cent of the Telecom Italia voting share capital. The transfer of the shares would take place at closing of the transaction between Vivendi and Telefónica Brasil.
The offer is subject to obtaining the relevant regulatory authorisations and to the fulfilment of other customary conditions in this type of transaction. According to the terms of the offer, it expires on September 3, 2014, unless it is previously accepted by Vivendi, or if bidders decide to extend the Offer’s validity period.
Vivo, commercial brand of Telefónica in Brazil, is the leader operator in the mobile wireless market and leading broadband services provider in the city of Sao Paulo. GVT is the most successful and fastest growing alternative operator in Brazil. A combination of Vivo and GVT would create the largest telecom operator in Latin America’s largest market, providing a platform for the generation of synergies and value creation.
Telefónica says the offer underlines its commitment to Brazil, a country where the Group has been making strong investments to consolidate the growth of the telecommunication market.