Vivendi may put GVT sale on hold after low bids: sources
LONDON/SAO PAULO (Reuters) - France's Vivendi SA (VIV.PA) could put the sale of its Brazilian phone and broadband Internet company GVT SA on hold as bids are coming short of the asking price of 7 billion euros to 8 billion euros, two sources familiar with the situation told Reuters.
Only two bidders remain in the auction process, the sources said. DirecTV (DTV.O), the largest U.S. satellite-television provider, is offering 6 billion euros ($7.9 billion) for GVT, a first source said. DirecTV is offering to pay two-thirds of that amount in cash and the rest in stock, the source added.
A consortium of buyout firms led by KKR & Co (KKR.N) is offering up to 5 billion euros for GVT, both sources said. BTG Pactual Group (BBTG11.SA), which was also looking at the company, has pulled out of the auction, the second source said.
That same source noted that Vivendi would be inclined to stop the process unless the offer is raised closer to the asking price. "Vivendi is not in a rush to sell," the source said.
Bankers and analysts were split over the outcome of the sale, with some saying Vivendi will resist selling GVT at a low price, while others bet it will give in to pressure and agree to a sale of the Brazilian company ahead of its April 30 shareholder meeting in Paris.
Shares of Vivendi fell as much as 1.3 percent in early trading on Thursday on concern the sale process could be pulled. But shares recouped losses in afternoon trading to close up 0.06 percent at 16.12 euros.
Vivendi decided to put GVT on the block last summer as it undertakes a review of its portfolio of businesses in mobile telephony, video games and music. Europe's largest media and telecommunications conglomerate is also seeking a buyer for its controlling stake in Maroc Telecom (IAM.CS).
A final decision on the GVT auction has not yet been made, the second source added.
"Should the disposal process disappoint, we expect investor focus to switch back to weak earnings momentum and limited credit rating headroom," UBS Securities analyst Polo Tang wrote in a client note. "Hopes of a GVT sale have pushed Vivendi shares higher in recent days and an end to the sale process is likely to disappoint."
Calls to a Paris-based Vivendi spokesman seeking a comment were not immediately answered. Spokespeople for DirecTV and KKR could not be immediately reached for a comment.
GVT has been a major driver of Vivendi's growth in recent years, but the price tag set for the unit could prove to have been too ambitious.
At the asking price tag, GVT would be valued at a little less than nine times 2013 estimated earnings, well above the average six times valuation for Grupo Oi SA (OIBR3.SA), America Movil SAB (AMXL.MX) and three more Latin American telecom peers, according to Thomson Reuters calculations.
Vivendi is looking to scale back its presence in telecommunications to focus more on its media assets, in a bid to boost its sagging share price. The company is penalized by a conglomerate discount, meaning investors undervalue it as a whole because of the wide range of its subsidiaries. Shares in Vivendi have lost about two-fifths of their value in the past five years.
A purchase price of at least 7 billion euros would be more than twice the roughly 3 billion euros Vivendi paid in 2009 for GVT, an alternative provider of fixed telephone, broadband, and TV services in 120 Brazilian cities.
The unit, bankrolled with 2 billion euros from Vivendi, has spent heavily to build its high-speed fiber broadband network.
(Editing by Andrew Hay)
- Tweet this
- Share this
- Digg this
- Malaysia Airlines plane missing at sea off Vietnam, presumed crashed
- Hollywood blockbuster 'Noah' faces ban in Arab world
- IndiGo plane evacuated after rear wheel catches fire in Nepal
- CORRECTED-UPDATE 4-Malaysia Airlines plane crashes in South China Sea with 239 people aboard - report
- WRAPUP 5-Malaysia Airlines plane missing at sea off Vietnam, presumed crashed