UPDATE 1-Vivo shares jump on Telefonica offer for stake

* Vivo shares soar on Telefonica offer for PT stake

* Telefonica bid implies large premium for Vivo shares

* TIM Participacoes shares also gain on consolidation hope
(Adds analyst comments, TIM Participacoes, byline)

By Elzio Barreto

SAO PAULO, May 11 (BestGrowthStock) – Shares of Brazil’s largest
mobile phone company, Vivo, and rival TIM Participacoes jumped
on Tuesday on an expected wave of consolidation in the
country’s telecommunications market after Telefonica made an
unsolicited bid to take over Vivo.

Preferred shares of Vivo (VIVO4.SA: ) jumped 7.6 percent in
late morning trade to 48.94 reais and traded as high as 49.15
reais. The company’s voting shares (VIVO3.SA: ) soared 33.3
percent to 58 reais and traded as high as 58.1 reais.

Telefonica (TEF.MC: ) offered Portugal Telecom 5.7 billion
euros ($7.65 billion) for its 50-percent stake in Brasilcel NV,
the holding company that controls Vivo.

But Portugal Telecom (PTC.LS: ) said late on Monday its board
unanimously rejected the unsolicited offer, calling Vivo “an
essential asset.”

The offer implies a price tag of 112.29 reais for each Vivo
voting share, according to a securities filing from Telefonica.
According to Brazilian securities rules, Telefonica would have
to make a tender to buy all outstanding voting stock at 80
percent of the value offered to Portugal Telecom.

“The (Telefonica ) offer should be a positive catalyst for
(Vivo) shares by underscoring their highly discounted valuation
and the strategic value of Vivo to its controlling
shareholders,” Credit Suisse analysts Andrew Campbell and
Marcelo Goncalves said in a note to clients.

The Telefonica and Portugal Telecom battle for control of
Vivo comes as companies bet on growth in emerging markets like
Brazil to counter a slowdown in developed economies.
[ID:nLDE64A0W0]

French media giant Vivendi (VIV.PA: ) took over Brazilian
phone company GVT last year, citing pent up demand for
high-speed Internet and phone services. Mexican billionaire
Carlos Slim has also sought to consolidate his
telecommunications empire in Latin America, with his America
Movil (AMXL.MX: ) tendering for control of two units in a bid to
offer combined services. [ID:nN11263159]

America Movil controls Brazil’s No. 2 mobile phone company,
Claro.

Preferred shares of TIM Participacoes (TCSL4.SA: ) gained 5.7
percent to 4.82 reais, while the company’s voting shares
(TCSL3.SA: ) jumped 7.4 percent to 6.53 reais.

TIM Participacoes could also be a target for Telefonica, if
its bid for the Portugal Telecom stake doesn’t succeed, BANIF
Securities said in a report on Tuesday. Telefonica has a
controlling stake in Telecom Italia (TLIT.MI: ), which controls
TIM Participacoes, the third-largest mobile phone company in
Brazil.

Stock Market Trading

(Editing by Padraic Cassidy)

UPDATE 1-Vivo shares jump on Telefonica offer for stake