L1 withdraws offer to support Oi after TIM walks away

News General Brazil 26 FEB 2016
L1 withdraws offer to support Oi after TIM walks away
Brazilian operator Oi announced that LetterOne Technology (L1 Technology) has issued a press release stating that it has been informed by TIM that TIM does not wish to enter into further discussions about a business combination with Oi in Brazil. L1 Technology said that, without TIM's participation, L1 Technology can't proceed with the proposed transaction as previously envisaged. Given this information, Oi said it will evaluate the impact of the possibility of consolidation of the Brazilian market.

LetterOne, owned by Russian billionaire Mikhail Fridman, offered in October 2015 to provide USD 4 billion to Oi to help the company participate in market consolidation. The transaction was conditional on Oi agreeing a merger with TIM Brasil, the operator controlled by Telecom Italia. Negotiations on a possible deal were delayed by the change in Telecom Italia's board after Vivendi became a major shareholder in the Italian operator. Since then Telecom Italia has announced plans to focus on investing its own operations. 

Oi was already working with its shareholder BTG Pactual on a potential restructuring and new financing. The company has been weighed down with debt since the its merger with Portugal Telecom was renegotiated, and the problems are compounded by the sharp slowdown in the Brazilian economy. Oi had hoped a merger with TIM would improve its financial and competitive positions against market leaders America Movil (Claro) and Telefonica Vivo. 

Categories:

General

Companies:

TIM,  Telecom Italia,  America Movil,  Claro,  Oi,  Portugal Telecom,  TIM Brasil,  Vivo,  Vivendi,  L1,  Telefonica

Countries:

Brazil

Tags:

Financial funding, M&A buyouts & divestments

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