Sonaecom Receives Approval to Start Offer for Portugal Telecom
Bloomberg writes…Sonaecom SGPS SA received approval from Portugal’s securities regulator to start its 10.7 billion- euro ($13.8 billion) hostile bid for Portugal Telecom SGPS SA, which would be the country’s biggest merger.
Sonaecom will offer 9.50 euros for each share in the former telephone monopoly from Jan. 16 through March 9, the Securities Market Commission said in a statement sent by e-mail today.
Portugal Telecom rejected the bid as too low soon after Sonaecom, its smaller rival in fixed-line and wireless service, announced its plan last February, and it repeated its view today. Portuguese investors said they and their partners were considering rival bids, though no other offers have materialized.
“It will be difficult for Sonaecom to make the deal at 9.50 euros a share,” said Pedro Pintassilgo, at F&C Management in Lisbon, who helps manage $390 million. “My main scenario is Sonaecom raising the price to 10 euros, not above that.”
Portugal Telecom shares added 7 cents, or 0.7 percent, to close at 10.20 euros before the announcement. The shares last traded for less than the offer price in July.
Sonaecom, based near Oporto, Portugal, has said repeatedly it won’t offer more, citing Portugal Telecom’s falling market share at home and in Brazil, where it owns 50 percent of a venture that controls the country’s biggest mobile-phone company. Should it raise the bid, it must offer at least 5 percent more. It’s barred from revising the bid in the final 10 days.
Portugal Telecom’s board today said its Brazilian unit is showing signs of recovery, and it said analyst estimates for its domestic performance are little changed since Sonaecom’s initial bid announcement.
Shareholder Meeting
Before it can complete the bid, Sonaecom will have to persuade shareholders to scrap a rule barring other phone companies from owning more than a 10 percent stake. Sonaecom is controlled by Belmiro de Azevedo, Portugal’s richest man.
Portugal Telecom’s statutes say shareholder meetings must be called with at least 30 days’ notice. Recent meetings were called more than 40 days in advance. Portugal Telecom Chairman Henrique Granadeiro said previously his board will call the meeting rather than waiting for Sonaecom.
Granadeiro said today he will next week call a board meeting to decide whether to ask shareholders to meet.
The shareholder meeting will probably take place in the final phase of the bid when Sonaecom can no longer review its offer, Sonaecom Chief Operating Officer Luis Reis said yesterday in a telephone interview.
“It’s important there is no more speculation when the meeting takes place,” Reis said.
Government Backing
Portugal’s government says it will reveal its view at the meeting. It owns 500 shares in a special category of stock that gives it “golden share” veto rights over mergers and other key decisions.
“Most likely they will approve it,” said John dos Santos, an analyst at Lisbon Brokers. A sale to Sonaecom meets “the objective of the golden share, that is, to keep it in national hands.”
Granadeiro said today that his board voted unanimously to reject the offer at 9.50 euros a share. The board includes a representative of state-owned bank Caixa Geral de Depositos SA.
The acquisition would merge two of Portugal’s three wireless companies to create a company holding more than 60 percent of the market and competing against Vodafone Group Plc.
Portugal’s Competition Authority approved the merger on Dec. 22, setting conditions aimed at ensuring continued competition, especially in the mobile market.
Sonaecom is also bidding for Portugal Telecom’s publicly traded PT Multimedia SGPS SA subsidiary, which controls most of the country’s pay-TV market. Portugal Telecom owns 58 percent of PT Multimedia, according to the cable company’s Web site.
Last March, Portuguese investors Miguel Pais do Amaral and Joao Pereira Coutinho said in separate statements that they were in talks with other investors about a possible rival bid for Portugal Telecom. Jose Berardo, an investor who owns about 2 percent of Portugal Telecom, said in December he had been approached about joining a counteroffer.
