Brazil's Claro-Desktop deal talks slow, shares fall over 23% Monday

By Luciana Magalhaes

SAO PAULO, Feb 23 (Reuters) - Negotiations for Brazilian telecom operator Claro to acquire internet provider Desktop DESK3.SA have slowed due to disagreements over contractual terms and pricing, sources familiar with the matter told Reuters.

Shares in Desktop, also based in Brazil, extended losses after the report on Monday, plunging over 23% and bringing their year-to-date decline to near 30%.

However, the stock price remains almost 20% higher than it was before news of the potential deal became public on October 7.

A deal had been expected by late January or early February, according to one source, who added that it remains uncertain whether the transaction will succeed, though negotiations continue.

A second source, who also requested anonymity as the discussions are confidential, described the deal as "on hold" pending price agreement.

A third person familiar with the deal, however, said there is still a chance an agreement could be announced in the short term.

Desktop had a market capitalization of 1.84 billion reais ($360 million) on Monday, though one source said the deal was expected to value the company at more than 2 billion reais.

Desktop declined to comment, while Claro did not immediately comment. Claro is owned by Mexican telecommunications company America Movil AMXB.MX. America Movil´s shares are up 10.6% year-to-date. The company operates in more than 20 countries in Latin America, Europe and elsewhere.

Desktop, which specializes in fiber optic internet services, disclosed in an October 7 securities filing that it was engaged in non-binding discussions regarding a "potential transaction," but that no agreement had been reached on price, structure or other key terms.

This is not Desktop's first time as an acquisition target. In 2024, Claro rival Telefonica Brasil VIVT3.SA also held discussions with the internet provider about a possible purchase.