Following the Portuguese government’s shock use of its golden share, Telefónica, Portugal Telecom, legal experts and the market are questioning the viability of the veto on the Spanish operator’s bid to control Brazilian mobile operator Vivo.
The…
Following the Portuguese government’s shock use of its golden share, Telefónica, Portugal Telecom, legal experts and the market are questioning the viability of the veto on the Spanish operator’s bid to control Brazilian mobile operator Vivo.
The operator, whose CEO Zeinal Bava had expressly stated that the Portuguese state’s golden share would not be invoked at the June 30 EGM vote on the Spanish operator’s bid to control Brasilcel, the holding company of mobile operator Vivo, appeared not to back the government.
On its own website, Portugal Telecom said that its board of directors had met after yesterday’s EGM and decided that there are “some legal matters that require clarification and, as a result, will be obtaining legal opinions”. It concluded that the board would meet again once to consider this advice.
Domestic shareholders – which include Banco Espirito Santo, Ongoing, Caixa Geral de Depositos and Visabeira, who together control some 24% of the group – backed Telefónica’s offer. The shareholders, which had voted against the Spanish operator’s first two offers, had been instructed by the Portuguese government to vote ‘no’ at yesterday’s meeting.
European Union officials were nonplussed. EU financial markets head Michel Barnier stated “We think having recourse to that golden clause is not justified”, he told journalists. The European Court of Justice is due to decide in a week’s time whether the golden share is legal.
Analysts unanimously questioned the deal as well.
Given the expectation that the golden share will be judged as not complying with EU law, it is unclear what the Portuguese government is hoping to achieve.
Telefónica’s response was, as expected, angry. On its website, the operator said it believes that the veto under the Golden Share is “illegal”, because it infringes both Portuguese and European Union law. The operator adds that in particular, the move violates Article 56 of the European Union Treaty.
Telefónica has extended the acceptance period of its doubly sweetened E7.15bn offer – reportedly 35 times Vivo’s expected 2010 earnings – until July 16 at 23:59.
