Telefonica has confirmed its acquisition of Vivendi’s Brazilian broadband operator GVT in a deal worth around EUR 7.2 billion in cash and shares. A final agreement was signed on 19 September after Vivendi had agreed to enter into exclusive negotiations with Telefonica on 28 August, snubbing a EUR 7 billion offer from Telecom Italia. The agreement, which was reached comfortably before the end of the three-month negotiation period, includes the payment of EUR 4.66 billion in cash, from which a bank debt of around EUR 450 million and adjustments in working capital must be deducted. In addition, Vivendi will receive 7.4 percent of Telefonica Brasil shares, at a stock market value of EUR 2.02 billion as of 18 September, and 5.7 percent of Telecom Italia shares (8.3% of voting share capital) at a stock market value of EUR 1.01 billion as of 18 September. Vivendi confirmed in a statement that it will also be liable for tax estimated at around EUR 500 million. It said the transaction should close before the end of the first-half of 2015, subject to regulatory approval from Anatel and Cade, Brazil’s telecoms and competition authorities.
Telefonica said it will finance the purchase via a capital increase at its Brazilian business, which the company will subscribe in proportion to its current stake of 74 percent. It will, in turn, finance its participation via its own capital increase.
The company predicts the deal will generate synergies of at least EUR 4.7 billion in Brazil. GVT owns a broadband network with over 10.4 million homes passed in 21 Brazilian states and more than 2.5 million broadband customers, most of them located outside of Sao Paulo. As a result Telefonica will boost its Brazil broadband market share to about 30 percent, compared with America Movil’s 32 percent and Oi’s 27 percent.
