Telefónica S.A. recently signed the final agreement for the purchase of Global Village Telecom GVT from France based content and media conglomerate, Vivendi.

Photo Credit: PR, Screenshot 

Telefónica S.A. recently signed the final agreement for the purchase of Global Village Telecom GVT from France based content and media conglomerate,Vivendi, in a cash and stock deal valued at 7.2 billion euros. The deal, which is still subject to approval by regulatory bodies is Brazil, is expected to be completed sometime in mid 2015.

Details of the agreement include 4.663M euros in cash as well as a payment representing 12% of share capital in Telefónica Brasil. However, Telefónica has also agreed to exchange 1.11 million ordinary shares (5.7% of total share capital) of Telecom Italia held by Telefónica for 4.5% of Vivendi’s soon to be acquired capital in Telefónica SA, once the deal goes through.

It takes a global village

The impetus behind all this share swapping gymnastics is the global phenomenon of buyer and seller markets finding each other across the globe at mutually opportune times.

In this case we see Telefónica chasing its acquire-and-conquer policy throughout Brazil, absorbing GVT’s 10.4 million homes and 2.5M broadband customers in 21 Brazilian states, into its regional name brand of Vivo to make it the country’s largest Telecom.

Vivendi, for its part, is looking to sell off non-key assets in its bid to pay off outstanding debt while furthering its aspirations for Telecom Italia, of which Vivendi Chairman Vincent Bollore already owns a 5% stake in the the company’s largest shareholder, Mediobanca.

Both sides seem to have walked away with a fair deal as far as the specifics go with this solitary purchase. However, what is far more interesting to note is the way this deal is facilitating the individual strategies of both Telefónica and Vivendi  in dealing with the particular market trends of their regions; namely, the emerging market environment in South America for Telefónica SA and the more tenuous market conditions now effecting many EU member states.

How effective these two disparate strategies will be at capitalizing on opportunities and mitigating risks, in and from these respective business environments, remains to be seen.