Spain's Telefonica Offers Vivendi $8.9 Billion for Brazilian Telecom Unit‎

The acquisition of Global Village Telecom would make Madrid-based Telefonica Latin America's largest telecom operator.

MADRID -- Spanish telecoms giant Telefonica has offered to buy Global Village Telecom (GVT) from France’s Vivendi for $8.9 billion in a deal that the company says reaffirms its commitment to the Brazilian market and would simultaneously turn it into Latin America’s largest operator.

Vivo, the commercial brand of Telefonica in Brasil, is the leader in the mobile wireless market and leading broadband services provider in the city of Sao Paulo. GVT is the most successful and fastest growing alternative operator in Brazil. A combination of Vivo and GVT would create the largest telecom operator in Latin America’s largest market.

Madrid-based Telefonica has offered to pay $5.3 billion (about 11.9 billion Brazilian reais) in cash, and shares equivalent to 12 percent of the combined companies. The total offer for GVT is the equivalent of $8.9 billion (about 20.1 billion Brazilian reais).

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The deal would be financed via a capital increase at Telefonica Brasil subscribed by Telefonica S.A. in proportion to its current stake (74 percent). The deal also offers Vivendi an 8.3 percent stake in Telecom Italia if there's interest - Telefonica would offer Vivendi up to $1.11 billion ordinary shares of Telecom Italia. Such a deal with Vivendi could make approval from Brazilain regulators easier, given that Telecom Italia is one of Telefonica’s main rivals in Brazil.

The offer expires on Sept. 3