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8 October 2009 By Aliza Rosenbaum

The French media group s E2bn bid for the telecom upstart GVT has now been challenged by Telefónica s Brazilian arm, Telesp. It s easy to see why Vivendi wants in on the hot market, but Telesp s ability to reap synergies gives it an edge in sealing the deal.

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Telesp, the Brazilian subsidiary of Spain's Telefónica, bid R$48 a share ($27.5) for GVT on October 7, challenging a R$42 a share proposed bid from Vivendi made in early September.

GVT's antitakeover provision, which would need to be waived to complete either deal, requires a premium of 25% above the highest price over the last 12 months. That amount would have been R$47.2 for Vivendi's proposed bid (25% premium to 52 week high reached on August 13).

As a part of the Vivendi offer, GVT's controlling shareholders agreed to tender a minimum of 20% of GVT's outstanding shares out of the 30% they currently own.

GVT shares rose nealry 14% on October 7 and closed at R$46.50 on October 8.

GVT has not hired any bankers. BNP Paribas is advising Vivendi and JPMorgan and Santander are working with Telesp.

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