Telefónica said that it had offered around $8.9 billion in shares and cash for Global Village Telecom, which is a Brazilian company controlled by Vivendi of France.
This deal would combine Telefónica’s broadband and mobile operations in Brazil, which operate under the Vivo brand, with those of Global Village Telecom, thereby creating the biggest telecommunications provider in Brazil.
Telefónica said that this offer underlines Telefónica’s commitment to Brazil, a country where the group has been making strong investments to strengthen the growth of the telecommunication market.
Based in Madrid, Telefónica has offered to pay around $5.3 billion or 11.9 billion Brazilian reais in cash and shares equivalent to 12 percent of the combined companies. The total offer is the equivalent of around $8.9 billion.
If accepted, the deal is subject to regulatory approval and Vivendi has until September 3rd to consider the offer. Telefónica has also added it is willing to offer Vivendi a stake worth upto 8.3 percent in Telecom Italia as part of the deal.
Telefónica recently announced plans to sell convertible bonds in Telecom Italia worth around $1 billion or 750 million euros, to reduce its stake in the Italian company and appease Brazil’s competition regulators.
According to Vivendi, none of its subsidiaries are for sale, but it would consider the offer.
If successful, the transaction would be the latest in a wave of consolidation as Telefónica and other European carriers swap assets in hopes of attracting more customer dollars by offering bundled television, mobile, broadband and landline services.
Telefónica’s Brazilian operations are a main driver of its business in Latin America, and it accounted for 42 percent of its revenue in the region last year. In 2013, the company’s Brazilian business posted revenue of €12.2 billion.
As of the end of June, the company had around 95 million customer access accounts in Brazil, primarily driven by mobile customers.
In Europe, one of the largest telecommunications providers Telefónica, operates in 24 countries and employs around 120,000 people. For the first half of 2014, the company posted revenue of €24.9 billion and had over 315.7 million customers.