13 November, 2009
UPDATE 2-Vivendi takes over Brazil's GVT, trumps Telefonica
* Vivendi unexpectedly gains control of Brazil's GVT
* Wins 53.7 pct of GVT capital through purchases, options
* Move comes one day after takeovers were cleared by gov't
(Recasts first sentence, adds Telefonica comment, financial
details)
By Guillermo Parra-Bernal and Cesar Bianconi
SAO PAULO, Nov 13 (Reuters) - France's Vivendi on Friday
gained control of Brazilian telecom company GVT for up to 4.12
billion reais ($2.39 billion), trumping Spain's Telefonica to
gain a foothold in Latin America's biggest market.
In a surprise move, Paris-based Vivendi (VIV.PA) said it
acquired 37.9 percent of GVT's (GVTT3.SA) voting shares for 56
reais each, and disclosed that it had the right to exercise
irrevocable options for an additional stake of 19.6 percent.
In a statement, Vivendi also said it will file a mandatory
tender offer of 56 reais a share for all of GVT's share
capital. Vivendi's bid values GVT at 7.2 billion reais, or
about $4.8 billion.
The counterbid, which sources familiar with the situation
said was spearheaded by Vivendi Chief Executive Jean Bernard
Levy himself, outmaneuvered Spanish telecom giant Telefonica
(TEF.MC), which had been aggressively seeking GVT.
Vivendi's foray into Brazil follows Levy's drive to expand
into fast-growing emerging markets as business in the developed
world sags because of the global recession.
The French media group, which owns the Universal music
company and mobile and fixed-line carriers in France and
Morocco, will provide GVT with the necessary financial muscle
to face bigger rivals like Mexico's Telmex (TELMEXL.MX)(TMX.N)
and Telefonica.
Vivendi outmatched Telefonica's 50.5 reais a share offer
made on Nov. 4 by 10.9 percent. Telefonica's $4 billion bid had
been seen by most analysts as a sure winner.
With Friday's deal, Vivendi averted a bidding war with
Telefonica, something the company has long sought to avoid. The
company first made a friendly approach for GVT in September,
offering 42 reais a share.
Vivendi's management has been vocal about buying assets
that do not endanger the company's investment-grade debt
ratings or put at risk its policy of paying high dividends.
BLOW TO TELEFONICA
Vivendi's win is a major blow for Telefonica, which looked
poised to win GVT with the government's blessing.
Brazil's telecoms watchdog Anatel had ruled on Thursday
that Telefonica could proceed with plans to take over GVT under
a series of restrictions such as keeping financial operations
and the brand autonomous for five years.
Anatel also ruled that no restrictions would apply in an
eventual purchase of GVT by Vivendi.
Faced with eroding margins and saddled with fines for poor
service in Sao Paulo state, Telefonica wanted GVT to help it
revive bottom-line growth.
The entry of a new player has long been seen as a welcome
opportunity to break the near-stranglehold on broadband in Sao
Paulo held by Telefonica's Telesp (TLPP4.SA) unit and rival Net
Servicos de Comunicacao (NETC4.SA).
"Relative to the news that circulated this afternoon,
Telefonica wishes the best to GVT," a Telefonica spokeswoman
said by telephone.
GVT management and controlling shareholders view a tie-up
with Vivendi as positive because it would let them pursue their
growth strategy with little interference, Chief Executive Amos
Genish told Reuters on Sept. 9.
"We would be a better company with Vivendi," Genish said at
the time. Telefonica wanted to retain management -- seen as the
magic behind GVT's success.
GVT's shares closed up 0.64 percent on Friday at 53.34
reais a share, after falling as much as 4.4 percent earlier in
the session.
($1=1.722 reais)
(Reporting by Guillermo Parra-Bernal and Cesar Bianconi,
editing by Matthew Lewis)
Source: http://www.reuters.com
UPDATE 2-Vivendi takes over Brazil's GVT, trumps Telefonica Added: (13.11.2009)
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