The Portuguese government has vetoed a E7.15bn offer from Telefonica to buy Portugal Telecom’s 50% stake in Brasilcel at an Extraordinary General Meeting held today.
Spanish firm Telefonica made a last ditch attempt to persuade PT to sell out of…
The Portuguese government has vetoed a E7.15bn offer from Telefonica to buy Portugal Telecom’s 50% stake in Brasilcel at an Extraordinary General Meeting held today.
Spanish firm Telefonica made a last ditch attempt to persuade PT to sell out of Brazilian mobile operator Vivo, which is co-owned by the two European firms via their joint venture holding company Brasilcel, by increasing its bid by 10% to E7.15bn.
Brasilcel owns 60% of Vivo.
The government used its golden share, which consists of 500 Class A shares, to vote against Telefonica’s proposal, meaning that the offer was rejected ‘in accordance with the independent interpretation of the Chairman of the Shareholders Meeting of Portugal Telecom bylaws’.
Portugal Telecom said that the owners of 68.7% of its share capital were present at the meeting, of which 62.9% were admitted to vote. Despite recently agreeing to sell its 8% stake in Portugal Telecom to avoid not being able to vote, Telefonica was blocked from voting on the deal, as were Mediobanca and SG. The Portuguese market regulator CMVM adjudged that through these companies Telefonica had retained an effective control of a 10% stake in Portugal Telecom and so would be prevented from voting.
According to Portugal Telecom, 73.9% of shareholders voted in favour of the deal, while 26.1% voted against the offer.
The Portuguese government has reportedly defended its move, saying that it is in the interest of the country to maintain the size of its largest company by market value.
The governments golden share has been intensely scrutinised in recent years amid question marks over its legality.
The European Court of Justice is due to examine the golden share, which is there to prevent hostile takeovers, and whether it should be allowed to stand next month.
Telefonica is being advised by UBS and Credit Suisse, while Portugal Telecom is advised by BoA Merrill Lynch.
