Telefonica Move Rewires Potential in Latin America

In the land rush to get into the Latin American telecom business, property just got a little bit more scarce.

Telefonica de Espana (TEF Quote) announced late Wednesday an all-stock tender offer to acquire all the shares of its Latin American subsidiaries in Peru, Brazil and Argentina, setting off what is likely to be a new wave of telecom consolidation in the region. The Spanish phone giant, the largest shareholder in each of the four companies, will give minority holders of Telefonica de Argentina (TAR Quote), Telefonica del Peru (TDP Quote) and Brazilian cellular companies Telesp Participacoes (TCP Quote) and TeleSudeste Celular Participacoes (TSD Quote) shares in itself at an exchange ratio implying a 40% premium over each company's average price over the five trading days prior to the deal.

Unsurprisingly, investors in the companies, all of which trade as ADRs in New York, made out well on the news. TeleSudeste ADRs traded in New York rose 31%; Telefonica de Argentina, 29%; Telefonica del Peru, 23%; and Telesp Participacoes, 7.54%. ...