Embratel, Embrapar launch tender offer for outstanding Net Servicos shares

18 Oct 2013

PRNewswirs writes that Brazilian telecoms groups Empresa Brasileira de Telecomunicacoes (Embratel) and Embratel Participacoes (Embrapar) have launched their previously announced tender offer for ‘all [outstanding] common shares and preferred shares, including preferred shares represented by American depositary shares (ADSs)’, of Brazilian cable operator Net Servicos de Comunicacao (Net), priced at BRL29.02 (USD13.37) per common share and per preferred share, plus statutory interest. In a meeting held on 15 October, the board of Net Servicos agreed unanimously that the Embratel-Embrapar offer is in the best interests of the company and its investors, although it noted that a final decision on the proposal is ultimately ‘at their discretion’. The tender will start on 27 November and take place concurrently in the United States and Brazil.

TeleGeography’s GlobalComms Database writes that the ownership of Net changed in 2010 when long-distance carrier and fellow America Movil (AM)/Telmex Internacional company Embratel conducted a public tender offer to purchase all Net’s preferred shares, including preferred shares represented by ADSs, other than preferred shares held by the cableco’s parent company, Embrapar. Embratel purchased the preferred shares in the tender offer via auction in October 2010. Embratel’s purchase triggered a buy option – since it held more than two-thirds of preferred shares of Net – and by end January 2011 Embratel had acquired an additional 49.847 million shares. In October 2010 Embratel spent BRL3.3 billion to increase its ownership of Net Servicos to 35%, and in January 2011 the former increased its preferred stock holding in the cable operator to 92.27%. Documents filed with the Securities Commission show that Embratel acquired 49,847,863 preferred shares of Net Servicos through a voluntary offer, representing 21.81% of preferred shares of the company, as per a rights option which ran from 13 October 2010 until 13 January 2011. With the purchase, Embratel holds 92.27% of all preferred shares of Net, and Embrapar owns, along with its subsidiary Embratel, 97.63% of the group’s preferred shares.

Ultimate parent AM is looking to merge its fixed and mobile telecoms and cable TV operations in Brazil, and in April 2013 it announced plans to amalgamate Embratel Participacoes, Claro-branded mobile unit Telecom Americas and Net Servicos, in a bid to reduce overall operational costs.