Telefonica SA’s share price up, ups bid for Vivendi’s GVT to $9.8bn

Telefonica SA, the worlds sixth-largest mobile network provider, revealed its increased offer for Vivendis GVT. The Spanish carrier will offer €7.45 billion (~$9.8bn) for Vivendis Brazilian unit, an 11% increase from the previous offer, as it outbids Italys Telecom Italia.

The board of Vivendi SA is to meet today in order to discuss the bid. If the acquisition is finalized, this would mean a major repositioning in the Brazilian telecoms market, with Telefonica currently having 29% share of the wireless market, while Telecom Italia has 27%. GVT has a 12% market share of Brazils broadband market and 9% in its landline market.

“It makes a lot of sense for Telefonica to push it if they feel that letting Telecom Italia get hold of GVT might close the door on a Brazilian mobile consolidation angle,” Paul Marsch, analyst at Berenberg Bank, said for Bloomberg. “That is at least partly what is at play here.”

The offers of both Telefonica and Telecom Italia come with a sizable stake in their companies going to Vivendi, meaning the final decision will likely be based not so much on cash, but on synergies and relations.

“At the end this battle will be won by the party who is able to offer Vivendi the best industrial synergies, since cash is not the key point,” Carnevale Maffe, a professor of business strategy at Milan’s Bocconi University, said for Bloomberg.

Telefonica SA added 0.04% to trade at €12.14 per share by 7:05 GMT, marking a one year change of +15.85% and a market value of €55.20bn (~$bn). According to the Financial Times, the 29 analysts offering 12-month price targets for Telefonica SA have a median target of €12.50, with a high estimate of €14.50 and a low estimate of €8.20. The median estimate represents a 3.01% increase from the last price of €12.14.