Terra Peregrin, the Portuguese investment vehicle of Angolan entrepreneur Isabel dos Santos, which holds a controlling interest in Portugal’s second largest operator Nos, has made a €1.2bn (US$1.4bn) offer to acquire Portugal Telecom (PT) SPGS,…
Terra Peregrin, the Portuguese investment vehicle of Angolan entrepreneur Isabel dos Santos, which holds a controlling interest in Portugal’s second largest operator Nos, has made a €1.2bn (US$1.4bn) offer to acquire Portugal Telecom (PT) SPGS, according to a securities filing.
PT SPGS is the holding company of Portugal Telecom, which holds a 25.6% in Brazilian operator Oi, along with Rioforte’s €900m (US$1.15bn)debt.
Terra has offered €1.35 (US$1.7) per share, which represents an 11% premium to PT’s closing price on Friday.
Although Terra said in the filing that it aims to maintain the big strategic lines defined by the takeover targets’ board and the objectives inherent in the agreements between PT and Oi, it also imposed a number of conditions in its offer.
These include a request that the merger process between Oi and PT, first announced in October last year, be suspended for 30 days, that the acceptance level exceed 50% and that there are no major changes such as a sale of strategic assets.
The Portuguese regulator, the CMVM, suspended the trading of PT shares today following the announcement but lifted it a few hours later after Oi released a statement saying that dos Santos’ bid was “untimely”.
The Brazilian telco, which, as a result of the merger, owns PT Portugal’s operations, said that any changes to the agreements between the two companies “conflict with the terms previously disclosed to the market which were the subject of specific negotiations between Oi and PT SGPS, which include the listing of the combined entity’s shares on the Novo Mercado segment of the Sao Paulo stock exchange.
A number of equity analysts familiar with Nos and PT said dos Santos’ offer was mainly aimed at thwarting Altice’s €7.03bn (US$8.8bn)bid for Oi’s Portuguese assets.
Last week, Luxembourg-based telecoms holding Altice, owned by French-Israeli businessman Patrick Drahi, made a fully-financed binding offer to buy PT’s business outside Africa, excluding its Rio Forte debt securities, Oi treasury shares and PT financing vehicles.
Other potential bidders for PT assets reportedly included PE firm Apax Partners in partnership with peers CVC Capital and Bain Capital.
By acquiring PT’s 25.6% stake in Oi, dos Santos would play a more active role in the consolidation process of the Portuguese telecoms industry and also hold a stake in Oi’s Africatel, which the company is trying to sell along with other non-core assets to reduce its R$46bn in debt (US$19bn), analysts said.
Oi’s 75%-owned subsidiary Africatel, rumoured to be valued at about US$2bn, has a 25% stake in Unitel. Fellow shareholders include dos Santos and Angolan state-owned oil company Sonangol, which at the end of August were reportedly looking to acquire its Unitel stake.
Highly-leveraged Oi is looking to raise cash to expand in the domestic market, where the company is reportedly preparing a joint bid for Brazil’s second-largest player, Telecom Italia (TI)-owned Tim Brasil, along with America Movil and Telefonica.
Last month, the company said it would consider offloading its Portuguese assets, but not undo the merger.
In early September, Oi and PT revised the terms of their combination, following Rioforte Investments’ default on a €847m (US$1.1bn) debt payment to the Portuguese operator, which Oi was not aware of prior to the merger, forced PT to reduce its stake in the combined entity from 37.4% to 25.6%.
Analysts told Telecom Finance that Terra’s bid is unlikely to be approved by PT SPGS’ shareholders as it undervalues the company and also delays the Oi-PT merger which is about to complete.
Should her bid be successful, dos Santos would also face regulatory hurdles, due to her controlling interest in PT’s rival Nos, one of the analysts said.
Caixa-Banco de Investimento, the investment banking unit of Portuguese state-owned lender Caixa Geral de Depositos SA, is reportedly advising dos Santos on the offer.
Last week, Zopt, which is owned by local conglomerate Sonae and dos Santos, reportedly issued a statement saying it would be willing to cooperate with Oi and PT to help defend the national interest.
