ODDO + VIVENDI (BUY, TP E24) TELEFONICA MAKES FORMAL OFFER FOR GVT: TEF confirms
this WE rumour and its subsidiary Telefonica Brazil makes a formal offer for
GVT at E6.7bn (offer is in real), 60% in cash, balance in Telefonica Brazil
share. Tef Brazil would issue new shares to finance the cash part of the deal,
TEF (74% holder) would participate and itself issue new shares through a
capital increase. Offer is valid till Sept 3rd, subject to relevant regulatory
authorizations, and TEF even mentions it could pay VIV... in TIT shares (1110m
shares, 8.3% of the Kal, a little less than E1bn.
OUR VIEW: obviously good news for VIV, even if the premium vs our GVT valuation
is not massive (we value GVT at E6.4bn, i.e E4.9 per VIV share) representing
only E0.3 per share. BUT we believe we are on top of consensus here. Can VIV
accept such an offer ? the board ackonwledges the offer eventhough it
reiterates that none of its units are for sale. We believe nevertheless it
could sell GVT (bear in mind it already tried to sell it at the very beginning
of the asset review at VIV 2 years ago) and believe a takeover battle TIT/TEF
is possible for it as a "fix/mobile" convergence deal in Brazil does make
sense. Note we understand that management of TIT was on the road recently and that they were quite "talkative" about GVT... More to come once I chat with
analyst, but there's clearly some hidden value in GVT. We reiterate (more than
ever) BUY reco on VIV, TP E24