Brazil financial paper nears 50% stake sale

news.ft.com By Jonathan Wheatley in Sa~o Paulo Published: February 16 2003 22:04 | Last Updated: February 16 2003 22:04

The owners of Gazeta Mercantil, Brazil's biggest financial daily, were close to an agreement on Sunday to sell 50 per cent of the newspaper to a Brazilian businessman, a source close to the talks said.

Under the deal, which may be announced on Monday, German Efromovich, whose interests include a shipyard and an air taxi company, would take a 50 per cent stake in Gazeta Mercantil, possibly through the formation of a new company together with Gazeta Mercantil's owners, led by Luiz Fernando Levy.

Gazeta Mercantil has long been in similar talks with Recoletos, the Spanish media group controlled by Pearson, which also owns the Financial Times. It has also held talks with Brazilian and US media companies. Negotiations are said to have foundered on the question of majority ownership.

Gazeta Mercantil has come under increasing pressure from debt in recent years. Staff have gone unpaid for months at a time, and payments to suppliers have been delayed, along with taxes and social security contributions. The company's net debt is said to be of the order of R$150 million ($41 million). Mr Efromovich is understood to have offered about R$80 million for fifty per cent of the company.

Mr Efromovich's bid may yet be challenged by Nelson Tenure, another Brazilian businessman who recently took control of Jornal do Brasil, a Rio de Janeiro-based daily. Last year Mr Tenure took over an unpaid debt owed by Gazeta Mercantil to Bank of America. He claims that Gazeta Mercantil's default on the debt gives him the right to control of the newspaper.

Consolidation of Brazil's media industry is expected to continue following the approval last year of a law allowing Brazilian and foreign companies to own up to 30 per cent of media groups. Ownership had previously been restricted to Brazilian private citizens.

Another Spanish group, Promotora de Informaciones, publisher of daily newspaper El Pais, is said to be interested in buying Brazilian assets, as are the Cisneros Group of Venezuela and Rupert Murdoch's News Corp.