Telemar and Brasil Telecom Investors to Swap Stakes

Telemar and Brasil Telecom investors plan to swap their stakes in each other in a deal that could facilitate a merger of the two phone companies. Zain Participacoes and Argolis Participacoes, holding companies with indirect stakes in both, plan to swap assets so each focuses its investment in one company, the companies say in regulatory filings. Zain, which indirectly controls Brasil Telecom, will spin off its 16% stake in Argolis and transfer the shares to Argolis, which indirectly controls Telemar. Argolis will cancel shares it owns in Zain and issue new shares that will be given to Zain shareholders. The companies say the motivation for the transactions is to increase transparency and simplify the shareholder structures. Telemar shareholders said earlier this month they were in talks to buy Brasil Telecom.