Telefonica Sets Rights Issue Terms

MADRID--Spanish telecommunications giant Telefonica SA (TEF.MC) will sell 281.2 million shares to existing shareholders to raise 3 billion euros ($3.3 billion) for its acquisition of Brazilian cable operator GVT.

In a regulatory filing published late Wednesday, Telefonica said the new shares will be sold at EUR10.84 each. The decision was taken at a board meeting Wednesday, hours after the Spanish firm received approval for the takeover from Brazil's competition regulator CADE.

France's Vivendi SA (VIV.FR) agreed in September to sell GVT to Telefonica for EUR7.24 billion, and the Spanish company first outlined its plans to launch a rights issue at that time.

The acquisition will bolster Telefonica's position as the leading telecommunications firm in Latin America's biggest economy, reinforcing its broadband Internet and fixed-line telephone operations with GVT's assets.

Telefonica is paying Vivendi EUR4.66 billion in cash, which it will raise with a separate capital increase at Telefonica Brasil. The Madrid-based parent company, which owns 74% of its Brazilian unit, will pay for its share of that capital increase with the EUR3 billion rights issue.

Vivendi is also receiving a stake in Telefonica Brasil and shares in Telecom Italia SpA (TIT.MI) as part of the agreement.

Wednesday's approval from CADE was the last formal step for Telefonica to complete the purchase. Earlier this month, the deal was rubber-stamped by Brazil's telecommunications regulator, Anatel.

-Write to Christopher Bjork at [e-mail]

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