FROM DIALOG NEWSEDGE
[AP Online]
Portuguese conglomerate Sonae said Monday it has offered 10.7 billion euros ($12.8 billion) to buy Portugal Telecom.
Sonae said in a statement it will pay 9.5 euros ($11.38) a share in an all-cash offer that is the biggest-ever takeover bid on the Lisbon Stock Exchange.
Portugal Telecom shares closed Monday at 8.8 euros ($10.50) at the close of trading on the Lisbon Stock Exchange on Monday. Portugal Telecom is almost four times larger than Sonae, which has a market capitalization of around 2.4 billion euros ($2.87 billion).
Sonae said its offer is contingent on acquiring at least 50.01 percent of the former state telecoms monopoly's 1.13 billion shares.
Sonae also said its bid would need approval from Portugal Telecom's shareholders for it to hold more than 10 percent of the company's voting rights. That is not currently allowed under Portugal Telecom's statutes and a change would require a general assembly of the company's shareholders.
The takeover, which has the financial backing of Spain's Banco Santander, would also require national and international regulatory approval, Sonae said.
Portugal Telecom officials were not immediately available for comment.
The Portuguese government has a nominal share in PT, but the tiny quota gives it special veto rights over strategic issues such as mergers. However, that power was devised mostly to fend off foreign takeovers, and the government has been under pressure from the European Union to surrender its special voting rights and move out of the private sector.
Nine shareholders control 46.2 percent of Portugal Telecom's shares. The largest shareholder is Spain's Telefonica, with 9.96 percent. Brandes Investment Partners owns 8.5 percent, Portuguese bank Banco Espirito Santo owns 8.4 percent and state-owned Caixa Geral de Depositos, the country's largest bank, owns 5.1 percent.
Telefonica and PT work together in a handful of key markets, including Brazil, where the two run the Vivo mobile brand.
PT controls both Portugal's fixed-line network as well as its main cable television network called TV Cabo. It is required by law to lease use of its fixed-line network to competitors.
In the domestic market Sonae and PT have often clashed over regulatory issues. Sonae has repeatedly accused PT of using its advantage as a former monopoly to skew competition.
Sonae, controlled by Portuguese tycoon Belmiro de Azevedo, has invested heavily to build out its own fixed-line network, mainly to support Internet clients.
Sonae is active in the telecoms sector through its subsidiary Sonaecom, which runs the country's third-largest mobile operator, Optimus, as well as a fixed-line operator called Novis. France Telecom has a 23.75 stake in Sonaecom.
Sonae, based in northern Portugal, is also involved in distribution operations, shopping mall management, tourism and industrial production of wood-based materials.
In December, Sonae, sold its chain of stores in Brazil to Wal-Mart Stores Inc., the world's largest retailer, for 635 million euros ($760 million).
Copyright (c) 2006 The Associated Press.
Copyright (c) 2006 The Dialog Corporation.
