Portugal blocks Telefonica takeover bid - 02.07.2010

THE Portuguese government has blocked a bid by Spanish company Telefonica to buy a stake in Brazilian telecom operator Vivo, held by Portugal Telecom (PT).

The government has a special blocking right in PT through its “golden share”, designed to prevent a hostile takeover.

 

 

Telefonica said the government’s decision and the use of the “golden share” was “illegal and in violation” of regulations in Portugal and the European Union.

 

 

Portugal Telecom shareholders voted by a large majority to accept Telefonica’s offer to buy PT’s 50% stake in Brasilcel, the holding company which controls 60% of Vivo.

 

 

Hours ahead of the meeting, Telefonica, which already holds a 50% stake in Brasilcel, increased its offer from 6.5 billion to 7.15 billion euros.

 

 

After the government’s decision, Telefonica said it would extend the acceptance period of its bid to 16^th July.

 

 

Portuguese Prime Minister Jose Socrates told parliament last Friday that he had given instructions to the public bank, Caixa general de depositos, a leading shareholder in Portugal Telecom, to vote against the Spanish offer.

 

 

He also said earlier this month that the government’s “golden share” in PT was “there to be used when necessary”.