Crédit des Alpes originated this transaction and advised GVT’s majority shareholders

Vivendi Gains Control of GVT, Trumping Telefonica

Nov. 13 (Bloomberg) — Vivendi SA, owner of the world’s largest music company, gained control of GVT (Holding) SA by purchasing a majority stake and began a mandatory bid for the rest of the shares, trumping a competing offer by Telefonica SA. The bid of 56 Brazilian reais a share values the company at 7.2 billion reais ($4.18 billion). Paris-based Vivendi said in a Web site announcement today it holds stock and options amounting to a 58 percent stake in the target company. ”The acquisition of GVT is totally aligned with our strategy of secular expansion in rapid growth economies,” Chief Executive Officer Jean-Bernard Levy said in the statement. ”As it did some years ago in Morocco, Vivendi is committing itself to a large and lasting investment in Brazil, which both in the short and longer term will create value for our shareholders.” Vivendi owns Maroc Telecom, French mobile-phone operator SFR and the world’s largest music company. The company is considering the sale of its stake in NBC Universal, the U.S. media company controlled by General Electric Co. Levy has labeled that business a “non-core” asset.
”It was a price much higher than Vivendi’s initial offer and also much higher than what I consider a fair price,” said Alex Pardellas, a Banif Corretora analyst in Sao Paulo. ”They are paying a premium to set foot in the country.” Vivendi said in the statement it purchased 37.9 percent of GVT’s outstanding voting share capital, and has a right to buy 19.6 percent more through call options, giving it almost 58 percent of GVT. Out of the Game
The company acquired the stakes of GVT’s controlling shareholders Global Village Telecom (Holland) BV and Swarth Group, as well as shares from smaller investors. Under Brazilian law, Vivendi filed a mandatory tender offer for GVT due to its purchase of the controlling stake, according to the statement. Unlike Vivendi, Madrid-based Telefonica is already a major player in Brazil, the company’s second-biggest market after Spain. Its Telesp – Telecomunicacoes de Sao Paulo SA unit has a 27.6 percent market share for fixed-line services, according to data from IHS Global Insight, a market intelligence firm. It also holds 50 percent of Vivo Participacoes SA, Brazil’s largest wireless carrier, with Portugal Telecom SGPS SA.
GVT, which has 2.5 percent of the fixed-line market, offered regional cost savings to Telefonica. ”Telesp can now expect more competition as GVT expands into Sao Paulo,” Rizwan Ali, head of research at Deutsche Bank AG, wrote in a note to clients. ”Vivendi’s entry in the Brazilian telecom sector will also fuel speculation as to what else it can buy to offer a full menu of services.”

Best Offer
Telefonica, Europe’s second-largest phone company, offered to buy GVT shares for 50.50 reais each, 20 percent more than an initial 42-real offer Vivendi put out Sept. 8.
The bid was ”the highest price we could offer considering synergies between Telefonica and GVT,” Antonio Carlos Valente, CEO of Telefonica’s unit in Brazil, said after Vivendi’s announcement.
The Spanish company also said in an e-mail Brazil is a ”highly strategic market” for the company and it is still looking for opportunities in the country.
Vivendi rose 19 cents to 19.81 euros today in Paris. The stock has lost 15 percent this year. GVT closed at 53.34 reais in Brazil, surging 47 percent since Vivendi’s first offer.
Brazil’s telecommunications agency, known as Anatel, cleared the way for both Vivendi or Telefonica to buy GVT yesterday, while setting conditions for the Spanish company. Restrictions weren’t set on a Vivendi-GVT deal because the French company doesn’t operate in Brazil yet.

Public Scrutiny
A transaction led by Telefonica was also under a public consultation opened by Sao Paulo’s federal prosecutor’s office. The government wanted public input on whether a purchase would affect the company’s ability to invest in its Brazilian network and services. Anatel in June blocked Telesp from selling its high-speed Internet service after four system failures in the past year halted operations in private and public services including police stations and schools. Telesp was prohibited from selling its Speedy service for two months.
GVT emerged in 1999 during Brazil’s privatization of the telecommunications industry. CEO Amos Genish and Chairman Shaul Shani helped the carrier outpace growth at its older rivals by focusing on customers and businesses willing to pay for faster Internet service. The carrier was formed as the government auctioned its stake in an international carrier and in three fixed-lines companies, each one operating in a different region. Brazil then auctioned licenses to create the so-called mirror operators to compete with the former state-controlled carriers.
GVT paid 100,000 reais for its license in August 1999 to operate in the same 10 states as Brasil Telecom SA while Telefonica bought Telecomunicacoes de Sao Paulo SA to operate in Sao Paulo, the most populous state. GVT, Brazil’s fourth-biggest high-speed Internet provider, has a 15,000-kilometer (9,300-mile) fiber-optic network.

About Vivendi
A world leader in communications and entertainment, Vivendi controls Activision Blizzard (#1 in video games worldwide), Universal Music Group (#1 in music worldwide), SFR (#2 in mobile and fixed telecom in France), Maroc Telecom Group (#1 in mobile and fixed telecom in Morocco), Canal+ Group (#1 in pay-TV in France) and owns 20% of NBCU (leading U.S. media and entertainment group). In 2008, Vivendi achieved revenues of €25.4 billion and adjusted net income of €2.7 billion. With operations in 77 countries, the Group has about 43,000 employees.

About GVT
GVT is the most well-recognized alternative to the fixed-line incumbents in the Brazilian market and the fastest growing telecommunications services provider in Brazil. GVT offers a diversified portfolio of solutions for conventional and VoIP telephony, corporate data, broadband, Internet services and pay TV. GVT’s net revenues and Adjusted EBITDA for the twelve-month period ended June 30, 2009 were R$1,495.0 million (about 800 million USD) and R$574.1 million (about 300 million USD), respectively. For the period from 2006 to 2008, GVT generated compounded annual growth rates of 31.1% for net revenues and an increase of 40.2% in Adjusted EBITDA, recording an Adjusted EBITDA margin of 38.0% in the first half of 2009. As of June 30, 2009, GVT had approximately 2.3 million lines in service (including voice, broadband, data and VoIP services). GVT is traded on the Brazilian BOVESPA under the symbol GVTT3.SA.

About Crédit des Alpes
Crédit des Alpes is a financial services group with over 25 years experience, specialising in sourcing and financing exclusive investment opportunities for institutional and corporate clients. Through its subsidiaries it also advises and co-invests in real-estate and private equity transactions. First established in Switzerland, Crédit des Alpes now operates throughout the world, and has executed transactions in numerous jurisdictions, in particular the United States, the United Kingdom, South America and Russia.

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