DirecTV, the largest U.S. satellite television provider has decided to end its pursuit of Vivendi's GVT, complicating the sale of the Brazilian telecommunications operator.
A DirecTV spokesman confirmed on Thursday that the company chose to "not to move forward in its pursuit of GVT and has withdrawn from the process."
The move is a major setback for Vivendi because it removes the only strategic buyer from the bidding. According to two people familiar with the group's thinking, the sale has been put on hold.
The other bidder was a consortium of private equity groups led by KKR that offered a lower price than DirecTV, Reuters previously reported.
GVT was put on the block last summer as Vivendi reviewed its portfolio of businesses in mobile telephony, video games and music. Europe's largest media and telecommunications conglomerate is also seeking a buyer for its controlling stake in Maroc Telecom.
The sale of Maroc Telecom has better traction because there are three bidders, including Quatar Telcom QSC, United Arab Emirates' Emirates Telecommunication Corp Ltd and South Korea's KT Corp, sources previously told Reuters.
Reuters reported on February 28 that the only other bidder besides DirecTV was a consortium of buyout firms led by KKR & Co LP. The sale had the potential to be put on hold since bids were short of the asking price of 7 billion euros to 8 billion euros, two sources had said.
Vivendi is looking to scale back its presence in telecommunications to focus more on media assets to help boost its sagging share price. The company is penalized by a conglomerate discount, meaning investors undervalue it as a whole because of the wide range of its subsidiaries. Vivendi shares have lost about two-fifths of their value in the past five years.
Vivendi and DirecTV shares were flat in after-market trading.
(Reporting By Liana B. Baker in New York, Guillermo Parra-Bernal in Sao Paulo and Leila Abboud in Paris.; Editing by Carol Bishopric and Andre Grenon)