Papers: Local groups vie for Telecom's Entel shares

Two Chilean investment groups are in separate talks with Telecom Italia (NYSE: IT) to acquire its 54.76% stake in Entel Chile, local press reported. Local businessman Juan Hurtado Vicuña leads the first interested group and is supported by Chilean insurance group Consorcio and other investors. Hurtado is in direct conversations with Telecom Italia and offers a price per share similar to market value, according to the report. Hurtado's strategy is to acquire Entel through his company Almendral. He would later bring in a partner by carrying out a capital increase in which local investment group Matte would be the only buyer. Hurtado and Matte previously had a joint 29.1% stake in Entel, which they sold to Telecom Italia in 2000 for US$905mn. Chile's securities regulator SVS suspended trading of Almendral stock on Wednesday because the share price had increased by 6.34% as a result of speculation about the possible acquisition. Almendral has offered US$1bn for a 54% stake in Entel, according to local newspaper La Segunda. The other potential buyer is investment fund Southern Cross, which recently sold Chilesat to Mexico's Telmex. Southern Cross partner Ricardo Rodríguez admitted he had received offers to purchase Telecom Italia shares in Entel. "Several groups have received this offer, including us, because they know we have the capital for it," local newspaper Diario Financiero quoted him as saying. Ideally, Southern Cross would purchase a stake of at least 25% and create a shareholders alliance with its investment partners to take control of Telecom's shares. The group has offered 4,100-4,250 pesos (US$7.01-7.27) a share and is waiting for a response from Telecom. A third interested party is investment group Quiñenco, which would build on its presence in Chile's telecommunication market through ownership of Telefónica del Sur (Telsur). Local press cited rumors that Quiñenco would trade Entel shares for Telsur shares. If the transaction takes place, it could happen as soon as end-February and the buyer would have to pay not less than US$900mn, the papers said. Local press doubted Telecom would launch a public offering despite its wish to receive at least 10% above market price, a markup rarely achieved without making a public offer.