[November 17, 2009] Vivendi shares drop on GVT bid cost: Natixis: ?The group will have an awful lot of difficulty convincing investors of the financial rationality of the deal", and downgraded the share to "Add". [Globes, Tel Aviv, Israel] Tweet (Globes (Tel Aviv) Via Acquire Media NewsEdge) Nov. 17--Shares in Vivendi SA (Euronext: VIV) fell yesterday on investors' concerns that it overpaid for Brazilian telecommunications provider GVT SA (Bovespa: GVTT3), jeopardizing its reputation for strong financial discipline, according to a "Dow Jones" report. Vivendi surprised the markets on Friday, when it announced that it outbid Spain's Telefonica SA (NYSE; IBEX:TEF; LSE:TDE) for a majority stake in GVT, in which Israeli businessman Shaul Shani owned the 29.9 percent controlling core through Swarth Group. The acquisition underscored Vivendi's determination to expand quickly in emerging markets. Vivendi acquired all of Swarth Group's stake in GVT, as well as stakes from other shareholders, for a total of 37.9 percent. It also received an option on an additional 19.6 percent in the company. Analysts, who had expected Vivendi to drop the deal, were disappointed with management's change in stance. "The group will have an awful lot of difficulty convincing investors of the financial rationality of the deal," Natixis analyst Richard Houbron said, and downgraded the share to "Add" from "Buy." "We had given high marks to management for its discipline in the past year, avoiding overpaying for assets in Spain or Africa. It now looks like even this discipline has been set aside," said Bernstein Research. A Vivendi spokesman said, "Our offer is completely in line with the company's strategy to invest in rapidly growing markets. GVT has an annual growth rate of 30 percent." In order to raise the money to buy GVT, analysts believe that Vivendi will have to sell NBC Universal, in the three-week window available to do so, which begins on Sunday. To see more of the Globes or to subscribe to the newspaper, go to http://www.globes-online.com. Copyright (c) 2009, Globes, Tel Aviv, Israel Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. [ Back To TMCnet.com's Homepage ]