Portugal Telecom rejects Sonae bid
08 February 2006
Incumbent Portuguese carrier Portugal Telecom shot down a hostile Euro 10.7bn ($12.8bn) takeover bid from Sonae late Tuesday night.
Reports on Wednesday however, suggest Sonae has a plan to win the backing of Spanish telco Telefonica, which could otherwise be a potential rival in the proposed acquisition.
Sonae is believed to be considering offloading Portugal Telecom's 50 per cent holding in leading Brazilian operator Vivo, should its bid be successful.
This would allow Telefonica, which owns the other 50 per cent of Vivo, to take control of the whole company. An offer believed to be very attractive for the Spanish telco.
Vivo controls over 34.54 per cent of the Brazilian market, and recorded operating revenues of Euro3bn ($1.3bn) in the three months to the end of September 2005.
Portugal Telecom this morning said its board of directors "is of the opinion that the current and future value of Portugal Telecom is considerably higher than the offer price."
Portugal Telecom's chief executive, Miguel Horta e Costa, described Sonae's bid as "unsolicited and hence hostile", adding that it significantly undervalued the current and future worth of the company.
The operator also expressed concern over Sonae's lack of a detailed strategy or long term vision for the Portugal Telecom group.
Shares in Portugal Telecom gained 2 per cent in early trading on Wednesday, on top of an 18.5 per cent rise on Tuesday. Analysts put the rise down to the continuing speculation of a counter offer to Sonae's bid.
That speculation was fuelled on Wednesday after a Portugese newspaper reported that Banco Esparito Santo, a leading PT shareholder with 8.5 per cent, was preparing a counter bid in association with other Portuguese shareholders and business groups.
A counter bid would have to be at least 5 per cent higher than the offer of Euro9.5 a share Sonae launched on Monday. PT shares were trading at Euro9.84 on Wednesday morning, up from Euro9.69 at Tuesday's close.
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