1 December, 2009
Vivendi faces Brazil scrutiny on GVT purchase
* Vivendi says owns now 62.85 pct of Brazil's GVT
* Brazil regulator questions procedures for GVT buyout
By Guillermo Parra-Bernal
SAO PAULO, Dec 1 (Reuters) - France's Vivendi (VIV.PA) is facing regulatory scrutiny in Brazil over its purchase of telecom firm GVT just as the media conglomerate on Tuesday boosted its stake through private stock purchases.
In a statement unveiled late on Monday, Brazil's securities regulator CVM said Vivendi has failed to explain why it has not settled irrevocable options for an additional stake of 19.6 percent in GVT (GVTT3.SA). Vivendi said its counterparty in the transaction is British investment fund Tyrus Capital.
"Research conducted by the CVM questions the capacity of Vivendi's counterparties to honor the options contracts described in the (previous) filing," the regulatory agency said in the statement.
As part of its takeover of GVT, Vivendi signed an agreement with Tyrus to buy its 19.6 percent stake, or 24.93 million shares, in the Brazilian phone company.
Vivendi bought 8.52 million shares of GVT from Tyrus on Nov. 17, but has yet to purchase the remainder, GVT said in a securities filing on Monday.
As part of the agreement between Tyrus and Vivendi, the British investment firm ceded rights to call options on GVT shares to Vivendi.
Payment of the call options will be made in cash and the settlement and delivery of the GVT stock will be made according to appropriate rules, GVT said without giving further details.
Vivendi said in a statement on Tuesday that it boosted its stake in GVT, including options, by another 5 percent to 62.85 percent. [ID:nWEA3707]
Vivendi's bid valued GVT at 7.2 billion reais, or about $4.2 billion.
TELEFONICA
In a surprise move on Nov. 13, the French company acquired 37.9 percent of GVT's voting shares for 56 reais each, and disclosed that it had the right to exercise the options from third parties it did not name, winning an additional 19.6 percent stake in the company.
The French company outmanoeuvered Spanish telecom giant Telefonica (TEF.MC), which had been aggressively seeking GVT.
Vivendi topped 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.
Telefonica will monitor the developments and could resume a plan to buy GVT, Valor Economico newspaper said on Tuesday.
"Our obligation is to defend the rights of our shareholders. We will do what it takes to do that," Telefonica's strategy and regulations director Eduardo Navarro told Valor in an interview.
A Vivendi spokesman in Paris could not immediately be reached for comment. A public relations official for Vivendi in Sao Paulo did not respond to a message left on his mobile phone.
A spokeswoman for Telefonica in Sao Paulo did not immediately respond to a message left by Reuters seeking comment.
Vivendi rose 3.1 percent to 19.79 euros on Tuesday in Paris. GVT fell 0.5 percent to 55 reais. Telefonica gained 1.5 percent to 19.41 euros.
(Additional reporting by Elzio Barreto in Sao Paulo)
((guillermo.parra@thomsonreuters.com; +55-11-5644-7714; Reuters Messaging: guillermo.parra.reuters.com@reuters.net))
Source: http://www.reuters.com
Vivendi faces Brazil scrutiny on GVT purchase Added: (01.12.2009)
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