Mergers & acquisitions in Latin America totaled $52.9 billion for the first nine months of 2015, down 43% from the same period this year, according to Dealogic, marking the lowest nine-month volume for the market since 2005.

Corporates in Brazil have been plagued by a pervasive corruption investigation, currency volatility and weak commodity prices, leaving prospective foreign investors concerned about the way forward for the region’s largest economy. Yet one transaction in particular from the country stood out against the rest of the region.

Spanish telecommunications operator Telefónica, through its Brazilian subsidiary dubbed Vivo, emerged to complete two of the largest Latin American transactions of the year. Vivo bucked the weak M&A trend of 2015 when it acquired Global Village Telecom in Brazil in May from French media group Vivendi for around €7.45 billion ($10 billion).

The acquisition was the largest in Latin America last year, and made Vivo Brazil’s biggest integrated telco by revenue. Vivo paid €4.66 billion, plus 12% of its own, post-merger share capital, for GVT.

To finance the purchase Vivo executed the region’s largest equity follow-on sale, raising around 16.1 billion reais ($5.4 billion). The telco sold 236.8 million preferred shares locally and as ADRs, at 47 reais each. Parent company Telefónica supported the transaction by buying 157.1 million preferred shares and all 121.6 million common shares on offer, at 38.47 reais each, conducting its own rights offering in Europe to buy the stock.

After an 18-day roadshow, where the company met over 100 institutional investors, the order book for the equity follow-on was oversubscribed with over 130 accounts from Brazil, the US and Europe. Vivo’s shares rose 3.04% the day after the deal priced, LatinFinance reported in April.

The initial seeds in this complex transaction were planted in the latter stages of 2014, says Alberto Horcajo Aguirre, Vivo’s chief financial officer.

“In August last year we expressed interest in buying GVT, while Telecom Italia also showed interest, but we countered with a larger bid that skewed it in our favor,” he says. “Time was of the essence, so as soon as we received regulatory approval [for the acquisition] we launched the follow-on.”

After agreeing the acquisition in September 2014, Vivo started work on the follow-on. Anticipating the closing of the acquisition in May 2015, Vivo priced the stock issue in April, enabling it to use the follow-on proceeds to partially finance the acquisition. By pricing the follow-on and completing the acquisition in the first half of 2015, Aguirre says the company avoided further turmoil that hit emerging markets when China’s central bank cut interest rates in August. The devaluation of the Chinese yuan hit emerging market currencies, including the Brazilian real.

“If we postponed the equity offering for as little as one month, we would have encountered big problems, given the macroeconomic troubles in Brazil,” he says. “The window to close the deals was tight and one deal could not work without the other.”

Investors were attracted to the liquidity of Vivo’s stock and the company’s story one equities banker says. “It’s one of the better telecom operators in Brazil and has a stable cash flow with a predictable low-risk business, with long-term contracts in both fixed phone lines and mobile.”

With the acquisition complete, Vivo’s management will focus on integrating its services with GVT, Aguirre says. Vivo’s strength in mobile telecommunications is expected to complement GVT’s expertise in the fixed-line segment. The combination of Telefônica Vivo and GVT has created a leading player in Brazil with a nationwide footprint.

“In the fixed line department, we are very concentrated in the São Paulo area,” Aguirre says. “So this acquisition should enable us to inorganically grow our fixed line services into other regions in Brazil.”

Bank of America-Merrill Lynch, Itaú BBA, Morgan Stanley and Santander were global coordinators on the follow-on. Bradesco, BTG Pactual, Credit Suisse, JPMorgan, Goldman Sachs and HSBC were joint bookrunners. Barclays, BBVA, Scotiabank and UBS were co-managers.

Credit Suisse, Deutsche Bank, Goldman Sachs, Lazard and Rothschild were financial advisors to GVT and Vivendi on the acquisition. Itaú BBA, JPMorgan and Morgan Stanley advised Telefônica.

Machado Meyer and Pinheiro Neto Advogados were legal counsel to Telefônica on the acquisition. Allen & Overy’s Paris practice and French law firm Cabinet Bompoint were legal advisors to GVT and Vivendi. LF

WINNERS: Telefônica vivo /GVT

Issuer: Telefônica Vivo

Finance Type/ Size: BRL16.1bn ($5.5bn) equity follow-on

Supporting Banks: Bank of America-Merrill Lynch, Itaú, Morgan Stanley, Santander, Bradesco, BTG Pactual, Credit Suisse, JPMorgan, Goldman Sachs, HSBC, UBS, Barclays, Scotiabank, BBVA

Law Firms: Machado Meyer, Mattos Filho, Davis Polk, Simpson Thacher