Telefonica SA (TEF), the Spanish phone company accelerating asset sales to help cut 57 billion euros of net debt, is nearing an agreement to sell its Atento call-center division to Bain Capital Partners LLC, according to people familiar with the matter.
Telefonica and Bain are working on details of an agreement valuing Atento at about 700 million euros ($848 million), which may be announced as early as this week, the people said, asking not to be identified as the negotiations are confidential. Permira Advisers LLP is also in talks with Telefonica about Atento, said another person with knowledge of the situation.
The sale proceeds will add to the disposal of a $1.4 billion stake in China Unicom (Hong Kong) Ltd. (762) last month. After a cut in Telefonica’s debt rating by Standard & Poor’s in May, Chief Executive Officer Cesar Alierta has announced plans to sell shares in the company’s German and Latin American assets. Telefonica was seeking about 1 billion euros from Atento after shelving plans a year ago for an initial public offering of the unit, people familiar with the matter said in June.
“This low price shows how investors are concerned about Atento’s potential growth and also labor regulation in Brazil, where most of its workforce is based,” said Andres Bolumburu, a Madrid-based analyst at Banco de Sabadell. “The asset is also really hard to manage because if Telefonica quits from being a customer, the risks for Atento are huge.”
Alex Stanton, a spokesman for Boston-based Bain Capital, declined to comment, as did an official at Telefonica. A representative for Permira in London didn’t immediately return a call seeking comment. Telefonica said July 11 that it had received several offers, without identifying the bidders.
No final sale agreement has been reached and the deal could still fall apart, the people said.
As part of its asset disposal plan, Telefonica is holding talks with companies including Permira to sell its 50 percent stake in online travel agency Rumbo, two people familiar with the matter said. Orizonia, a Spanish tourism holding company that owns the other half of Rumbo, could sell its stake to Permira or buy out the unit from Telefonica, one of the people said.
Telefonica may raise as much as 200 million euros from a sale, said another person with knowledge of the matter. Founded in 2000, Rumbo operates in Spain, Portugal and four Latin American countries including Brazil. Its revenue reached 485 million euros in 2010, according to the most recent available data.
Bain Capital, the private-equity firm co-founded by U.S. presidential candidate Mitt Romney, has backed companies including business-software provider MYOB Ltd. and cinema chain AMC Entertainment Inc. (AMC:US) The firm, whose investors include Yale University and the government of Singapore, is raising a $6 billion fund for further deals.
With about 156,000 employees, about half of Telefonica’s total, Atento had about 1.8 billion euros in 2011 revenue. That’s less than 3 percent of the 62.8 billion-euro sales reported by the parent company. Atento’s 2011 operating income before depreciation and amortization dropped 15 percent to 161 million euros.
Telefonica fell 3 percent to 8.75 euros at 2:37 p.m. in Madrid. The stock has slumped 35 percent this year, the worst performance among the 23 companies in the Bloomberg Europe Telecommunication Services Index, which has lost 6.8 percent. Telefonica is scheduled to report earnings July 26.
European phone operators are looking to shed assets and pay down debt as heavy regulation at home and slowing growth in emerging markets weigh on earnings. France Telecom SA (FTE), the country’s former phone monopoly, has agreed to sell units in Switzerland and Austria in the last year, while the Netherlands’ Royal KPN NV is seeking buyers for its Belgian business and some wireless towers in Germany.
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