Vivendi puts €7 billion price tag on GVT

Vivendi puts €7 billion price tag on GVT

Vivendi is reportedly looking to gain at least €7 billion from the sale of its Brazilian unit GVT.

The €7 billion price tag is more than twice the €3 billion Vivendi paid for the company in late 2009, although the unit has invested heavily in its high-speed fibre broadband network since then.

Reuters cites two sources with knowledge of the situation as saying that the unit, which is an alternative provider of fixed telephone, broadband and TV services in 120 Brazilian cities, has attracted interest from at least four early bidders, including Oi, América Móvil, DirecTV and Telecom Italia.

The price, at eight times 2013 estimated earnings, could be off-putting to the bidders, particularly given the high debt levels at Telecom Italia and Oi and América Móvil’s recent acquisition strategy, which has been to target undervalued companies.

"Synergies between GVT and other Vivendi units were not as strong as the company first imagined," one of the sources told Reuters. "But that doesn't mean that Vivendi will go on a New Year's sale mode and sell off GVT at any price. There is no way that will happen."

A third source told Reuters that a consortium of US-based private equity firms may also bid for the unit. Telefónica, which had also been linked with the sale after originally being outbid by Vivendi for GVT in 2009, is not involved in the process, according to the sources.

The sale of GVT is part of a group restructuring by Vivendi as the group looks to cut its debt and restore investor confidence following a 68% drop in share price between January 2011 and March 2012. The media group is also looking to sell its stake in Morocco’s Maroc Telecom and is eyeing a merger of its French telco SFR.

Reuters also reports that Vivendi will look to maintain a presence in Brazil, as it is a strong market for media and content, but would not elaborate on potential targets in those sectors.

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