Two of Brazil’s biggest telecoms companies have said they are to merge in a controversial deal that is outlawed under current legislation and, its parties believe, will end a decade of fierce disputes between the shareholders of the two groups.

Telemar, which operates as Oi, said on Friday it had agreed to buy Brasil Telecom for R$5.9bn ($3.5bn) and to make an offer to minority shareholders which, if completed, would raise the total purchase price to about R$12.4bn.