Telefonica eclipses Vivendi's bid for Brazil’s GVT with $4 billion offer

Global telecom major, Telefonica SA yesterday raised its takeover bid for Brazilian fixed line operator GVT (Holding) SA by over 5 per cent to R$50.50 (50.50 Brazilian reais) a share, amounting to R$6.95 billion (approximately $4 billion), eclipsing French rival Vivendi's September offer by around 20 per cent.

Telephonica's earlier offer was R$48 per share of GVT, while the French media conglomerate Vivendi offered $42 a share.

Through the acquisition of GVT, Telefonica aims to expand its fixed-line and broadband operations outside its base, Sao Paulo, while rival Vivendi intends to make an entry into the Brazilian fixed-line and internet market.

''The price has been increased to improve the offer's prospects of success. Moreover, it confirms the Company's capacity to proceed with the transaction and underlines its intention to acquire 100 per cent of the shares of GVT,'' Telefonica said in a statement.

The telecom major further said the revised bid was based on GVT's outstanding third quarter results which confirmed Telefonica's long-term expectations regarding the company's fundamentals. It further stated that the new price does not alter the legal or regulatory aspects of the bid.

The decision came one day after GVT shareholders approved to remove the so-called 'poison pill clause' from the company's bylaws that prevent takeover bids by a single shareholder.