By Christopher Bjork
MADRID-- Telefónica SA has taken the plunge with a two-pronged
stock sale to raise cash to pay for part of its EUR7.24 billion
($7.96 billion) takeover of Brazilian cable operator GVT from
France's Vivendi SA.
The Spanish telecommunications group has announced the terms of
two rights issues, one in Spain and the other in Brazil, to cover
the EUR4.66 billion cash portion of the acquisition which marks a
major entrenchment of its position in Latin America.
The acquisition of GVT should bolster Telefónica's position as
the leading telecommunications firm in Brazil, Latin America's
biggest economy, reinforcing its broadband Internet and fixed-line
telephone operations with GVT's assets. Telefónica agreed last
September to pay Vivendi in cash and stock for the Brazilian
business.
In Spain, Telefónica plans to sell 281.2 million shares to
existing shareholders to raise EUR3 billion. This cash will then be
used to cover Telefónica's participation of the stock sale at its
Brazilian unit in which it owns a 74% stake.
In a regulatory filing published late Wednesday, Telefónica said
the new shares will be sold at EUR10.84 each. The pricing was set
at a board meeting Wednesday, hours after the Spanish firm received
approval for the takeover from Brazil's competition regulator
CADE.
Separately, Telefónica Brasil said on Thursday it will sell 113
million common shares and 219.9 million preferred shares.
The company will offer its shares in Brazil and in U.S. in the
form of American Depositary Shares, or ADS. It didn't unveil a
timetable for the share offer.
Wednesday's approval from CADE was the last formal step for
Telefónica to complete the purchase. Earlier this month, the deal
was rubber-stamped by Brazil's telecommunications regulator,
Anatel.
Vivendi, which is also receiving a stake in Telefónica Brasil
and shares in Telecom Italia SpA as part of the GVT sale agreement,
is itself under pressure from some investors to say what it plans
to do with the money it has raised from this and a number of other
asset sales. U.S. activist fund P. Schoenfeld Asset Management
wants the media group to boost shareholder returns and clarify its
strategy ahead of next month's annual meeting.
--Rogerio Jelmayer in São Paulo contributed to this article.
Write to Christopher Bjork at christopher.bjork@wsj.com
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