Wednesday, September 9, 2009

Vivendi To Offer $3 Bln For Brazilian Telecom GVT

. Wednesday, September 9, 2009

By stockOzone team

French entertainment and telecoms group Vivendi (VIV.PA) said on Wednesday that it planned to launch an amicable bid for Brazilian telecom operator GVT (GVTT3.SA), in a deal that would be valued at 2 billion euros($2.88 billion) if completed.

Vivendi said it would launch a tender offer for 100 percent of GVT's capital at 42 reais per share, valuing the Brazilian broadband and telecoms player at 5.4 billion reais or 2 billion euros.

The price represents a 15.8 percent premium over GVT's closing share price of 36.26 reais on Tuesday.

Vivendi's offer would only go ahead if it could obtain at least 51 percent of GVT's capital. The tender offer is subject to getting Vivendi board approval and undertaking due diligence before October 16.

The controlling shareholders of GVT, Swarth Group and Global Village Telecom (Holland) BV. have agreed to sell at least 20 percent of GVT's outstanding shares to Vivendi, according to the French company.

The main GVT shareholders have also agreed to vote in favor of changing GVT's bylaws to get rid of an anti-takeover provision, according to Vivendi.

Swarth Group and Global Village Telecom could not immediately be reached for comment. A GVT spokeswoman declined to comment on the offer.

The offer is Vivendi's latest major move into emerging markets. In July it ended talks to buy a majority stake in the African telecoms unit of Kuwaiti telecoms company Zain (ZAIN.KW).

Barclays Capital analyst Michel Morin wrote in a note on Tuesday GVT's assets were "strategically attractive" for companies looking to expand in Brazil, one of the fastest growing emerging markets.

GVT is the leading alternative telecom provider in Brazil with 2.3 million lines in service in 81 of Brazil's largest cities. It had revenues of about $800 million and $300 million of adjusted operating profit last year.

"The strategic value of GVT's asset base and license to operate nationwide would be attractive to any operator looking to broaden their geographic reach in Brazil, in our view," said Morin.

GVT, founded by a group of Israeli investors, started operating in November 2000 in nine states in Brazil's south and the Federal District, competing with incumbent Brasil Telecom, which is now a part of Oi Participacoes (TNLP4.SA) (TNE.N).

GVT, which went public in 2007 with a 1.08 billion-real initial public offering, focuses on high-income households and corporate clients, offering voice services, broadbad Internet and data transmission.

Shareholders of GVT had filed last month to sell 718.4 million reais of their stock in a secondary offering, but Vivendi said the offering was now canceled.

GVT is controlled by Global Village Telecom (Holland), Swarth Investments LLC, Swarth Investments Holding LLC and Swarth Management LLC

($1=.6950 euro)

($1=1.8285 BRL)

Disclosure: Author does not own any of the stocks discussed here.

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