The big global M&A news lately has been down in Brazil, but the players are mostly based out of Europe. The target is Global Village Telecom (GVT), the growing broadband operator which is currently owned by the French media company Vivendi, and coveted by both Telefonica and Telecom Italia.
Both companies made bids yesterday for GVT. Telecom Italia is offering a combined stock and cash deal that would value the company at about €7B. Vivendi would wind up with about 20% of Telecom Italia if the deal were to go through, with Telecom Italia merging GVT with its existing Brazilian unit TIM Participacoes.
That would have trumped Telefonica's existing €6.7B proposal, but Telefonica quickly boosted the cash component of their offer to bring the total to €7.45B. That would give Vivendi about 12% of the combined businesses of Telefonica Brazil and GVT. Meanwhile, Telefonica would also give Vivendi an option to buy an 8.3% stake in Telecom Italia, which it also happens to own a chunk of.
Meanwhile, Brazil's Oi is supposedly looking to bid for TIM Participacoes, which would take Telecom Italia out of Brazil entirely. If Telefonica wins the war for GVT and Oi then successfully pulls off its part, four would become two rather quickly. Sounds like regulators there might have an interesting few months ahead.
So, we have a Spanish firm and an Italian firm dueling for a Portuguese-speaking unit of a French company, while a Portuguese-speaking Brazilian company bids for the Italian's Portuguese-speaking unit. It must be a romance language thing.
Of course, as South America's largest market, Brazil is where one needs to have a foothold if one wants to be there at all. And if not Brazil, perhaps the bidding will heat up over in Mexico next. After all, why would European telecoms want to consolidate actual European assets, haha.