A merger of Brazilian operator Oi and Portugal Telecom (PT) has run into difficulty after Brazil’s securities watchdog CVM reportedly sided with Oi’s minority shareholders in a dispute over the terms of a share issuance integral to the deal.
CVM has…
A merger of Brazilian operator Oi and Portugal Telecom (PT) has run into difficulty after Brazil’s securities watchdog CVM reportedly sided with Oi’s minority shareholders in a dispute over the terms of a share issuance integral to the deal.
CVM has said Oi’s controlling ownership group, Telemar Participacoes, is not allowed to participate in calculating the value of some of Oi’s assets, according to a preliminary decision document obtained by Bloomberg from minority shareholder Tempo Capital.
Oi and PT were set to use the value of the assets approved by their biggest shareholders to work out how shares in the newly-combined company, provisionally known as CorpCo, would be distributed.
Providing the decision is upheld, the companies will have to sweeten their offer to minority investors to get them on side. Currently Telemar is set to get its debts paid off while smaller investors’ stakes will be diluted through a new share issue to Portugal Telecom.
Oi’s shares rose more than 10% in the wake of the news. The merger was agreed at the start of October and was not unexpected, given how closely the companies had been working and the fact that PT is already Oi’s largest shareholder.
The companies aim to complete the deal in H1 2014, following approval from shareholders and the regulators.
The deal will need the green light from Brazilian and Portuguese Antitrust Authorities, telecom regulators Anatel and Anacom, and securities and exchange commissions in Brazil, Portugal and the US.
