Telecom Italia has made a EUR 7 billion cash-and-share offer for Vivendi's fast-growing Brazilian broadband unit GVT, prompting a bidding war with Telefonica, which almost immediately responded with a EUR 7.45 billion offer. Telecom Italia’s proposal envisages a merger between GVT and the Italian operator’s Brazilian unit TIM Brasil, with Vivendi taking a stake of around 15 percent in the combined company and 20 percent in Telecom Italia itself. The cash payment, meanwhile, will come from a capital increase by TIM Brasil. Overall, Telecom Italia confirmed that the bid was made up of 24 percent in cash and around 76 percent in shares and will be valid until 20 September.
Shortly after Telecom Italia released the details of its bid, Telefonica made a new offer for GVT worth EUR 7.45 billion, up from its 05 August proposal of EUR 6.7 billion. Telefonica said it would pay EUR 4.66 billion in cash and offer Vivendi a 12 percent stake in the new combined group to be created from the merger of GVT and Telefonica Brasil. Telefonica, whose offer expires on 29 August unless the two parties agree to an extension, also offered Vivendi an option to buy an 8.3 percent stake in Telecom Italia.
Vivendi said in a statement that the two bids will be examined at a board meeting to be held on 28 August. Its final decision may be influenced by competition concerns, with Telefonica having been ordered to scale back its influence in the Brazilian telecoms sector by the local regulator Cade. The Spanish group is currently the number one mobile operator in Brazil through its Vivo unit and would become the country's top internet provider if its bid for GVT succeeds.
The situation is further complicated by the news that Brazilian operator Oi is considering a takeover of TIM Brasil and has hired Banco BTG Pactual to review its options before making a bid for the Telecom Italia subsidiary. According to unnamed sources cited by Bloomberg, Banco BTG Pactual is trying to persuade Telefonica and America Movil to team up with Oi to make a joint offer for TIM Brasil before breaking it up. The bank is a shareholder in Oi and is expected to provide financial backing for its share of the bid.
