Brazil Oi Says Brasil Telecom Takeover Talks Intensified
Published on: 9th Jan 2008
Note -- this news article is more than a year old.
SAO PAULO (Dow Jones) Controlling shareholders of Brazilian phone company Tele Norte Leste Participacoes, or Oi, said Thursday that talks over the takeover of rival Brasil Telecom Participacoes have "intensified in the last few hours", but no deal has been signed
Meanwhile, the controlling shareholders, which group under the Telemar Participacoes holding company, have not made any decisions over the possible restructuring of Oi's share ownership, they said in a statement filed with the Brazilian Exchange Commission, or CVM, on Thursday.
Earlier Thursday, local newspapers Folha de Sao Paulo and Valor Economico reported that Oi had offered to pay 4.8 billion Brazilian reals ($2.71 billion) to assume the control of Brasil Telecom.
According to the Folha report, which cites unnamed sources, Brasil Telecom's controlling shareholders had already accepted the offer.
The Oi statement said values discussed, presumably with Brasil Telecom, are tentative and the ultimate value of any deal will depend on negotiations and the configuration of any ownership structure.
The deal would involve Citigroup's exit from the new telecom, which would be under the command of a wholly-owned Brazilian controlling group, led by Andrade Gutierrez and La Fonte Participacoes, according to the Valor Economico report.
The pension funds involved in both companies would seek to increase their stakes in the new firm, said the report.
A merger of the two companies would create a firm that dominates fixed-line services in all of Brazil, outside Sao Paulo state, Brazil's business and industrial center.
It would also control approximately 17% of the growing wireless phone market.
The company is being formed to compete with regional giants Telefonica and America Movil.
On Wednesday, Oi's share closed quoted at BRL38.82 on the Sao Paulo Stock Exchange, while the Brasil Telecom shares ended session at BRL28.28.
-By Alastair Stewart; Dow Jones Newswires; 5511 3145-1479; firstname.lastname@example.org
(END) Dow Jones Newswires