Embratel and Embrapar in $173 Million Offer for Net Serviços

Cleary Gottlieb represented Embratel, Embrapar and Net Serviços de Comunicação S.A., in connection with a “going-private” cash tender offer to acquire Net’s publicly held common shares and preferred shares (including preferred shares represented by American Depositary Shares listed on NASDAQ). The offer, valued at approximately $173 million, began on October 17 and was completed in an auction on the São Paulo Stock Exchange on November 27. The offer price in cash included a fixed amount plus statutory interest at a Brazilian benchmark interest rate, calculated pro rata from the initial announcement in June 2012 through the auction date, net of applicable fees and taxes. The transaction closed on December 2.

The offer was a unitary going-private transaction in the United States and Brazil on terms that complied with the applicable tender offer regulations of both jurisdictions. Cleary Gottlieb has advised on a number of similar offers in recent years, including Embratel’s 2011 offer for Net outstanding shares and Telmex’s 2006 offer for Embratel’s outstanding shares.

The offer was structured to satisfy two different offer requirements under Brazilian law: (i) a mandatory offer triggered when Embratel and Embrapar acquired control of Net in March 2012 and (ii) a voluntary offer in connection with Net’s withdrawal from the Level 2 listing regime of the São Paulo Stock Exchange. New Brazilian regulations required Net’s board of directors to provide unaffiliated shareholders with a reasoned opinion in favor of or against the acceptance of the tender offer, and its favorable recommendation made Net subject to the additional disclosure requirements of Rule 13e-3.

Embratel is a Brazilian corporation that owns one of the largest telecommunication systems in Brazil, operating domestic and international long distance, data communication and local services. Net is a leading multiservice company in the pay-television and broadband Internet industries in Brazil. Currently, it is the largest cable operator in Brazil and in Latin America, based on the number of subscribers and homes passed.