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Vivendi Floors Telefónica

3:05 PM -- A fiscal fist fight has been raging between Telefónica SA (NYSE: TEF) and Vivendi over Brazilian operator GVT during the past few weeks -- and it looks as if the French company has won the bout.

Vivendi entered the ring back in September, when it offered 42 Brazilian reais per GVT share, or 5.4 billion Brazilian reais (US$3.16 billion at current exchange rates) for the whole company. (See Vivendi Bids $2.9B for Brazilian Telco.)

Telefónica threw its first punch in early October with a counter bid (using its own Brazilian operator, Telesp, as the bidding vehicle) of BRL42 per GVT share. (See How Businesses Can 'Webify' Customer Care.)

Then, anticipating a Vivendi response, Telefónica (Telesp) delivered a body blow last week by increasing its bid to BRL50.5 per share. (See Telesp Ups GVT Bid.

But that didn't knock out Vivendi. The French media and telecom giant countered with a series of sharp jabs that saw it snap up 37.9 percent of GVT's shares at BRL56 apiece, and it now says it has "unconditional call options on an additional 19.6 per cent" of GVT's shares. As a result it's "filing a mandatory tender offer at BRL56 for 100 per cent of GVT’s share capital, due to its purchase of the control of GVT."

Vivendi's new offer of BRL56 per share values GVT, an alternative fixed-line operator with 2.3 million lines in service, at BRL7.2 billion ($4.2 billion).

News that Vivendi has had to increase its original offer by 33.3 percent to put itself in prime position to close the deal has spooked some Vivendi investors, as the company's share price dipped nearly 3 percent today to close at €19.30 on the Paris exchange.

— Ray Le Maistre, International News Editor, Light Reading

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