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Telefonica, Oi, Claro Said to Plan $15 Billion Offer for Tim 2014-12-10 18:43:51.298 GMT
By Cristiane Lucchesi, Manuel Baigorri and Christiana Sciaudone Dec. 10 (Bloomberg) -- Oi SA, Telefonica SA and Claro SA are planning to make an offer for Tim Participacoes SA that would value Brazil’s second-largest mobile-phone company at about $15 billion, people with knowledge of the matter said. The bid to buy Rio de Janeiro-based Tim, which is 67 percent owned by Telecom Italia SpA, would be made by Grupo BTG Pactual acting as a financial vehicle, the people said, asking not to be identified because the discussions are private. BTG would acquire Tim and then split it into three, the people said. Oi would have about 25 percent of Tim, and Claro -- owned by billionaire Carlos Slim’s America Movil SAB -- and Telefonica would divide the rest between them, the people said. Telefonica will join Oi and Claro later, after the acquisition of Brazilian broadband provider GVT is approved by Brazilian regulators, the people said. The companies are prepared to offer about 7.5 times Tim’s earnings before interest, taxes, depreciation and amortization, the people said. That would work out to be more than 40 billion reais ($15.3 billion), or about 40 percent above Tim’s valuation including debt, according to data compiled by Bloomberg. Representatives for Oi, Telefonica, Tim, America Movil, Claro and BTG declined to comment. Telecom Italia believes Tim should be valued at about 20 billion euros ($25 billion) or more, including debt, according to a person familiar with the matter. A Telecom Italia representative declined to comment. The Italian carrier last month received authorization from its board to explore a combination between Tim and Oi.
Portugal Sale
Mergers could help alleviate competition in Brazil, where price wars and government-mandated investments have eaten away at phone carriers’ margins. Oi said this week it agreed to sell its Portuguese assets to billionaire Patrick Drahi’s Altice SA for 7.4 billion euros, unraveling its merger with Portugal Telecom. The proceeds will enable Oi to pare its debt and take part in mergers and acquisitions. It said in a Dec. 8 statement that Oi would “maintain its objective of leading the consolidation movement in the Brazilian telecommunications market.” Telefonica, owner of the Vivo brand in Brazil, is prepared to take part in further consolidation in the country’s phone market, Chief Financial Officer Angel Vila said last month at a conference in Barcelona. Telefonica agreed in September to buy Brazilian broadband provider GVT from Vivendi SA. “We are in a position to participate, but probably we don’t need to be the ones to initiate,” he said. Banco Santander SA is advising Telefonica on the Tim deal. The bank declined to comment. America Movil Chief Financial Officer Carlos Garcia-Moreno said in a Sept. 9 interview that the carrier was entering talks to make a joint bid with Oi for Tim.
For Related News and Information: Tim Analyzes Oi, Says Deal for Brazil Rival Could Be ‘Accretive’ Billionaire Drahi to Buy Oi’s Portuguese Assets for $9.1 Billion Telecom Italia Gets Board Backing to Explore Oi Deal in Brazil Top Brazil Stories
--With assistance from Jonathan Levin in Sao Paulo, Daniele Lepido in Milan, Patricia Laya in Mexico City and Rodrigo Orihuela in Madrid.
To contact the reporters on this story: Cristiane Lucchesi in Sao Paulo at +55-11-2395-9317 or clucchesi5@bloomberg.net; Manuel Baigorri in London at +44-20-3525-4457 or mbaigorri@bloomberg.net; Christiana Sciaudone in Sao Paulo at +55-11-2395-9268 or csciaudone@bloomberg.net To contact the editors responsible for this story: Kenneth Wong at +49-30-70010-6215 or kwong11@bloomberg.net; Aaron Kirchfeld at +44-20-3525-8830 or akirchfeld@bloomberg.net Elizabeth Wollman, Ville Heiskanen