Sonae ups bid for Portuguese giant

Takeover target owns Portugal's leading pay-TV firm

LISBON — Portuguese telco operator Sonaecom has revised its bid for the country’s largest telecommunications and media company, Portugal Telecom.

At stake is the ownership of Portugal’s largest pay-TV operator, TV Cabo, which has 1.4 million subscribers. This reps more than 80% of the local cable and satellite market.

Sonaecom has raised its offer from Euros 9.50 ($12.49) per share to Euros 10.50 ($13.50), valuing the company at Euros 11.8 billion ($15.2 billion).

PT’s board advised shareholders against Sonae’s previous offer, considering it to be a hostile takeover bid (Daily Variety, Jan. 14).

PT’s shares are trading at Euros 10.24 ($13.46) — below the new bid price. Notwithstanding this fact, key PT shareholders, such as BES, Ongoing Investments and Joe Berardo, have stated that they are still unwilling to sell their shares at this price.

In the past weeks, Sonaecom has been campaigning actively in New York, London and Lisbon in favor of its proposal and several important shareholders have sold stock at the former price of Euros 9.50 ($12.49). These included Colonel Luis Silva, the founder of Portugal’s key film and video player, Lusomundo, who sold a block of PT shares, representing 0.5% of the total stock in late January.

The next step is PT’s general meeting to be held on March 2, where shareholders will be asked whether they agree to alter PT’s articles of association, eliminating the government’s golden share, which is a pre-requisite for Sonaecom’s offer to proceed.

The Portuguese state owns 7% of PT but also holds 500 golden shares that allows it to nominate one third of the board members, veto strategic decisions and limit voting rights.

The European Commission has already ruled against such golden shares and neighboring Spain recently eliminated golden shares in key companies such as Telefonica.

The market reacted favorably to Sonaecom’s revised offer and the company’s shares rose by 17% in the wake of the announcement.

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