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Case
-
Reference no. IMD-1-0363-ES
Spanish language
Published by: International Institute for Management Development (IMD)
Originally published in: 2017
Version: 27.03.2020
Length: 10 pages
Data source: Published sources

Abstract

This is a Spanish version. Case A of this series sets the scene for the largest merger and acquisition (M&A) deal in the telecom industry in Brazil and Latin America. Cases B to F follow on by relating the events up to the deal's conclusion. The sequencing of this story creates a sense of urgency for readers and forces them to take position on different questions at different times. Events began in 2003 when a 50:50 joint venture (JV) between Portugal Telecom (PT) and Spain's Telefonica acquired 60% of Vivo, the leading Brazilian mobile operator. In the subsequent years, Vivo experienced double-digit annual growth, as it reaped the benefits of its own heavy investments and booming consumer demand. In May 2010, Telefonica made a EUR5.7 billion cash bid for PT's share of the JV. According to Telefonica, this was a full, fair and final offer. How would PT's board regard the bid? On the one hand, it represented a 100% premium on Vivo's pre-announcement stock price. On the other hand, it was a terrible blow to the PT Group's international aspirations. Moreover, the occasionally conflicting views of the general public and the government had the potential to complicate matters further. Lastly, this deal also had important international implications.

Time period

The events covered by this case took place in 2010.

Geographical setting

Region:
Americas
Country:
Brazil

Featured companies

Portugal Telecom
Turnover:
EUR 56,731 million
Industry:
Telecommunications
Telefónica
Vivo

About

Abstract

This is a Spanish version. Case A of this series sets the scene for the largest merger and acquisition (M&A) deal in the telecom industry in Brazil and Latin America. Cases B to F follow on by relating the events up to the deal's conclusion. The sequencing of this story creates a sense of urgency for readers and forces them to take position on different questions at different times. Events began in 2003 when a 50:50 joint venture (JV) between Portugal Telecom (PT) and Spain's Telefonica acquired 60% of Vivo, the leading Brazilian mobile operator. In the subsequent years, Vivo experienced double-digit annual growth, as it reaped the benefits of its own heavy investments and booming consumer demand. In May 2010, Telefonica made a EUR5.7 billion cash bid for PT's share of the JV. According to Telefonica, this was a full, fair and final offer. How would PT's board regard the bid? On the one hand, it represented a 100% premium on Vivo's pre-announcement stock price. On the other hand, it was a terrible blow to the PT Group's international aspirations. Moreover, the occasionally conflicting views of the general public and the government had the potential to complicate matters further. Lastly, this deal also had important international implications.

Settings

Time period

The events covered by this case took place in 2010.

Geographical setting

Region:
Americas
Country:
Brazil

Featured companies

Portugal Telecom
Turnover:
EUR 56,731 million
Industry:
Telecommunications
Telefónica
Vivo

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