Telefonica increases Vivo bid

Spanish incumbent Telefonica increased its bid for Portugal Telecom’s indirect stake in the Brazilian mobile operator Vivo from E5.7bn to E6.5bn on June 1.
Telefonica states that it submitted a binding and unconditional offer for the acquisition of 50%…

Spanish incumbent Telefonica increased its bid for Portugal Telecom’s indirect stake in the Brazilian mobile operator Vivo from E5.7bn to E6.5bn on June 1.

Telefonica states that it submitted a binding and unconditional offer for the acquisition of 50% of the share capital of Brasilcel, the JV company owned by Telefonica and Portugal Telecom, which in turn owns 60% of Vivo.

Portugal Telecom confirmed that it has received a revised proposal worth E6.5bn, with two alternatives, one for the immediate sale of its entire stake and another to be executed at Portugal Telecom’s sole discretion during a three year period. The offer expires on June 30, but Telefonica may extend the offer period should Portugal Telecom’s board of directors submit the offer to a shareholders’ meeting.

If PT accepts the offer, Telefonica grants it a call option, to be exercised by PT or a third party over PT’s shares held by Telefonica.

PT stated that its board of directors met on June 1 and decided that the offer does not reflect the strategic value of this asset for Telefonica and resolved to immediately request a meeting to consult shareholders.

The board of directors also appointed the chairman, the CEO and the CFO to discuss the offer with Telefonica, until the shareholders’ meeting takes place.

Portugal Telecom is understood to be advised by BoA Merrill Lynch. Telefonica has mandated UBS and Credit Suisse.