UPDATE 1-Telecom Italia confirms interest in Brazil's GVT, bid pending

Thu Aug 14, 2014 2:45pm EDT

(Adds comment from Telecom Italia, context of deal)

SAO PAULO Aug 14 (Reuters) - Telecom Italia SpA on Thursday confirmed its interest in acquiring Vivendi SA's Brazilian broadband unit GVT SA, challenging a surprise 6.7 billion euro ($9 billion) bid by Telefonica SA.

Telecom Italia said in a securities filing it had not made a final offer, which would be subject to approval by shareholders of the Italian company and its Brazilian unit TIM ParticipaƧƵes SA.

"Telecom Italia confirms that it is undertaking a detailed review to determine whether it may be opportune to submit an offer to Vivendi SA to create an industrial combination that would include integration of the Brazilian businesses of the two groups," TIM and Telecom Italia said in simultaneous filings.

The announcement comes a day after Telecom Italia Chief Executive Officer Marco Patuano met Vivendi chairman Vincent Bollore to discuss the potential tie-up, according to two sources with knowledge of the situation.

Telecom Italia is likely to offer its shares to Vivendi in exchange for GVT, both sources told Reuters on Wednesday, asking not to be named since the talks are underway.

An eventual offer could give Vivendi a 20 percent stake in Telecom Italia in addition to a remaining minority stake in GVT, newspaper Valor Economico reported on Thursday without citing a source for the information.

Such an offer would value GVT at 20 billion reais ($8.8 billion) without considering debts, according to Valor.

That could trigger a higher bid from Telefonica, which has coveted GVT since it lost an initial bidding war to Vivendi to buy the company in 2009.

($1 = 2.2668 reais)

($1 = 0.7483 euro) (Reporting by Brad Haynes and Alberto Alerigi Jr.; Editing by Meredith Mazzilli and James Dalgleish)

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