Shareholders in Zon Multimedia have approved the Portuguese cableco’s plan to take over mobile operator Optimus. At an EGM in Lisbon 99% voted in favour of the merger.
Mooted for some time, a tie-up would mark considerable consolidation in the…
Shareholders in Zon Multimedia have approved the Portuguese cableco’s plan to take over mobile operator Optimus. At an EGM in Lisbon 99% voted in favour of the merger.
Mooted for some time, a tie-up would mark considerable consolidation in the Portuguese market and create a company generating annual revenues of €1.6bn. By incorporating the current third biggest wireless operator into the largest pay-TV provider it would create the second largest telco in the country, behind incumbent Portugal Telecom.
Zon and Optimus agreed the deal in January, which they said would create synergies of up to €400m. Speaking at a conference in London earlier this week ZON CFO Jose Pedro Pereira da Costa said savings would come from capex, branding and distribution, and by transferring customers from ZON’s MVNO, which currently runs on the Vodafone network, to the Optimus network.
The deal values Optimus at two thirds of the value of Zon and as part of the merger Zon will also increase its share capital.
Optimus is 100% owned by Sonaecom, which proposed the merger in December alongside Zon’s largest shareholder Isabel Dos Santos, Africa’s first female billionaire according to Forbes.
Dos Santos increased her stake in the cableco from 10% to 30% last year.
Sonaecom and Dos Santos have agreed to create a vehicle that will hold a controlling stake in the merged business. Dos Santos would contribute all her holdings in Zon to the joint venture, while Sonaecom would add a substantial part of its stake in Optimus.
According to a person briefed on the matter the 50-50 joint investment vehicle would likely hold 50% plus one share in the company.
Under Portuguese takeover regulation Sonaecom and Dos Santos would be required to launch a mandatory tender offer for the remainder of the shares once the newly merged company comes into existence because of the size of their vehicle’s stake. In the merger agreement it asked that they be exempt from that rule.
According to an analyst in Portugal the Portuguese securities commission (CMVM) is likely to approve the request because 99% of Zon shareholders voted in favour of the offer document which included the exemption proposal. He added that he did not anticipate that the bid would face any significant regulatory difficulties.
Another analyst said he thought there was a high chances of complete regulatory approval given both companies work in different sectors, and because of the precedent of the Sonae-Portugal Telecom (PT) approval. When Sonaecom’s parent Sonae tried to acquire PT in 2007 the Portuguese competition authority (ADC) allowed it, although it did require remedies. The deal fell apart subsequently for reasons unrelated to the regulatory situation.
“Remedies could be applied to Zon’s mobile MVNO or Optimus’ fixed-line operations but that would have very little impact,” the analyst said.
Portuguese conglomerate Sonae owns 53.17% of Sonaecom. The other main shareholder is France Telecom, which holds 20%. The French incumbent recently agreed to sell its stake to Sonae before the end of 2014.
Telecoms regulator Anacom is not expected to block the merger. In January its president Fatima Barros told Portugal’s parliament that Optimus needed the merger to survive in the mobile market.
Optimus currently has 21% of the wireless customers, trailing in a distant third behind Portugal Telecom’s TMN brand and Vodafone Portugal.
Optimus’ board is being advised by BPI and Santander. Zon’s board is being advised by Espírito Santo and Caixa BI.
