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Telefonica Brasil and Global Village Telecom to merge

Staff writer |
Telefonica S.A. and Telefonica Brasil have submitted an offer to Vivendi for the combination of Telefonica Brasil and Global Village Telecom (GVT).

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This includes a cash consideration of 11,962 million Brazilian Reais and newly issued shares representing 12% of the share capital of the new Telefonica Brasil, after its combination with GVT.

Considering the current market price of Telefonica Brasil, the offer amounts to a total of 20,100 million Brazilian Reais (equivalent to 6,700 million euros at current exchange rates). The cash consideration would be financed via a capital increase at Telefonica Brasil subscribed by Telefonica S.A. in proportion to its current stake (74%), whose contribution will be funded, in turn, via a capital increase.

The offer envisages that, should Vivendi be interested in acquiring a stable stake in Telecom Italia, Telefonica could offer Vivendi the acquisition, in cash, of up to 1,110 million ordinary shares of Telecom Italia, currently representing a stake of 8,3% of the Telecom Italia voting share capital. The transfer of the shares would take place at closing of the transaction between Vivendi and Telefonica Brasil.

The offer is subject to obtaining the relevant regulatory authorizations and to the fulfillment of other customary conditions in this type of transaction. According to the terms of the offer, it expires on September 3, 2014, unless it is previously accepted by Vivendi, S.A., or if bidders decide to extend the Offer’s validity period.

Vivo, commercial brand of Telefonica in Brazil, is the leader operator in the mobile wireless market and leading broadband services provider in the city of Sao Paulo. GVT is the most successful and fastest growing alternative operator in Brazil. A combination of Vivo and GVT would create the largest telecom operator in Latin America’s largest market, providing a unique platform for the generation of synergies and value creation.

This offer underlines Telefonica’s commitment to Brazil, a country where the Group has been making strong investments to consolidate the growth of the telecommunication market.

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