Brazil Federal Prosecutors Investigate Vivendi Purchase Of GVT
December 22 2009 - 1:44PM
Dow Jones News
Brazilian federal prosecutors have opened an investigation into
the recent purchase of local telecom operator GVT Holding SA
(GVTT3.BR) by French media giant Vivendi SA (VIV.FR, VIVDY, VIVEF),
a prosecutor said Tuesday.
Rio de Janeiro-based Prosecutor Claudio Gheventer said he is
conducting inquiries into allegations printed in local newspapers
that the deal didn't respect the rights of minority
shareholders.
The federal investigation is in its initial stages and will run
alongside one already started by the Brazilian Securities and
Exchange Commission, or CVM.
The controversy started in September when Vivendi launched a bid
for GVT, a small alternative telecom operator. Spain's Telefonica
SA (TEF, TEF.MC) came in with counterbids and many had expected the
dispute to be settled at an auction set for late November. But on
Nov. 13, Vivendi surprised many by announcing that it had quietly
acquired the rights to buy 37.9% of GVT and held options to buy
another 19.6% from Tyrus Capital LLC, thus giving it the power to
take control of GVT.
CVM is looking into allegations that Tyrus didn't have access to
the shares it claimed to on Nov. 13 and that the fund wasn't
qualified to hold such a large stake in GVT.
The French company claims that it didn't do anything that
contravened Brazilian law and has supplied the CVM with all
relevant information.
In a statement late Monday, CVM said that it continues its
investigations and will only issue opinions on the subject at the
end of the process.
Vivendi has subsequently raised its stake in GVT to 72% and
claims that Telefonica's complaints about the manner in which the
company gained control are moot as it is now undisputedly in
control of the asset.
If CVM decides the actions of Vivendi contravened regulations,
it could impose fines on the French firm. However, public
prosecutors could ask a judge to freeze the takeover, if they
believe there was wrongdoing.
Vivendi executives weren't immediately available for
comment.
-By Alastair Stewart, Dow Jones Newswires; 5511 2847-4520;
alastair.stewart@dowjones.com
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