Telefonica Buys Control of Brasilcel and Vivo in $9.75 Billion Deal

Telefonica's (TEF) battle to acquire a controlling stake in Brazil's leading mobile phone company, Vivo, has reached a resolution, with the Spanish telecom giant ponying up nearly $9.75 billion to acquire full ownership in Brasilcel from Portugal Telecom (PT), the companies announced Wednesday. Telefonica and Portugal Telecom each owned a 50% stake in Brasilcel, which holds a controlling 60% stake in Vivo.

For Telefonica, the deal comes just months after it launched an unsolicited bid for the half of Brasilcel that it didn't already own. Telefonica tried to wrest the remaining half from Portugal Telecom in May, but its first offer was slapped down as too small. After several sweetened bids and an eventual "yes" vote from Portugal Telecom shareholders, Telefonica's efforts were blocked the government of Portugal, which apparently was reluctant to see one of its major corporations lose such a growth engine.

But in offering an additional $1.3 billion for the deal, Telefonica managed to remove even the Lisbon government's opposition.

"We are delighted to have reached this agreement with Portugal Telecom which benefits both companies shareholders. It is a unique value creation opportunity. Vivo leads the Brazilian mobile telephony market, a market to which Telefonica is strategically committed," said Telefonica Chairman Cesar Alierta in a statement.

The deal will dramatically increase Telefonica's presence in Brazil, a fast-growing market it entered in 1999. The combined business operations of Telefonica and Vivo are expected to yield 69.2 million customers in Brazil. The companies expect to close the transaction within 60 days.