Two of Brazil’s biggest telecoms companies are to merge in a controversial deal which, its parties believe, will end a decade of fierce disputes between the shareholders of the two groups, reports the FT.
Telemar, which operates as Oi, said Friday it had agreed to buy Brasil Telecom for R$5.9bn ($3.5bn) and to make an offer to minority shareholders which, if completed, would raise the total purchase price to about R$12.4bn.
The deal would create Brazil’s biggest telecoms operator, with about 57% of the country’s fixed lines and 40% of broadband services. Although prohibited under current legislation, government ministers support the merger because it would create a national champion capable of taking on Telefónica, of Spain, and companies owned by Carlos Slim, the Mexican telecoms billionaire, which dominate the sector in Latin America.
In a statement to market regulators on Friday, Telemar said it expected to receive regulatory approval and the deal to be completed within 240 days. Meanwhile, Credit Suisse acting on behalf of Telemar would buy control of Brasil Telecom for R$5.9bn. In the event regulators did not approve the deal, Telemar would pay a kill fee of R$490m, adds the FT.