Telecom Italia offers €7B for GVT as Telefónica ups bid

Vivendi confirmed it has received binding offers for its Brazilian subsidiary Global Village Telecom (GVT) from Telecom Italia and Telefónica, marking the official start of a bidding war in Brazil between the two European telecoms heavyweights.

The French group said the offer from Telecom Italia represents a total enterprise value of €7 billion ($9.2 billion), including a cash part of €1.7 billion, a part in Telecom Italia shares (16 per cent of share capital and 21.7 per cent of voting rights), and a part in TIM Brasil shares (15 per cent). This offer expires on Sept. 10.

Telefónica, which previously made a bid for GVT that valued the unit at €6.7 billion, improved its offer to €7.4 billion, including €4.6 billion in cash. The offer also includes a part in Telefónica Brasil shares (12 per cent), of which about one third can be exchanged at Vivendi's discretion for 5.7 per cent of the share capital, and 8.3 per cent of the voting rights in Telecom Italia. This offer expires on Aug. 29, although Telefónica said in its statement confirming the revised offer that the deadline could be extended.

Vivendi also confirmed that the two financial offers include proposals for content partnerships and said its supervisory board will meet on Thursday Aug. 28 to examine the two offers and decide what actions to take.

The moves by the Italian and Spanish operators had been much anticipated and highlight the importance of the Latin American market as a future area of growth. The two operators already compete in Brazil via Telefónica's Vivo and TIM Participações (TIM Brasil), and are now looking at ways to boost their position and seek greater market consolidation.

Telecom Italia confirmed its offer to create a "global partnership" with Vivendi through three phases that would ultimately lead to the merger of GVT with TIM Brasil.

"The offer provides for the creation of a new leading player in the ICT and Media & Entertainment sectors through the integration of the respective Brazilian operations and the entry of the French group into the capital of Telecom Italia," the Italian operator said in a statement.

Telecom Italia's Brazilian unit also continues to be of interest to other players, meanwhile, and Brazil's Oi on Wednesday confirmed reports it has hired Banco BTG Pactual to examine a possible proposal to buy shares in TIM Brasil.

In a statement also released on Wednesday, Telecom Italia said it knew nothing about the move by Oi and saw TIM Brasil as a "strategic asset."

According to Reuters, an adviser to the Italian company described Oi's move signalling that it might make an offer for TIM Brasil as little more than a spoiling tactic. "It seems just a disruption tactic...Disruption tactics can end in many different ways, even in a court of law," Sergio Erede told Reuters.

For more:
- see this Vivendi statement
- see this Telecom Italia statement
- see this Telefónica statement
- see this Oi statement
- see this Reuters article

Related Articles:
Reports: Telefónica, Telecom Italia prepare GVT bidding war, as Oi eyes TIM Brasil
Report: Vodafone targets TIM Brasil acquisition to enter Brazilian mobile market
Report: Telecom Italia preparing €7B bid for Vivendi's GVT
Telecom Italia confirms interest in Vivendi unit GVT
Report: Telecom Italia CEO to discuss GVT bid with Vivendi this week

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