PT rejects buyout offer from Telefonica in Brazil - Mobile World Live

PT rejects buyout offer from Telefonica in Brazil

11 MAY 2010

Portugal Telecom (PT) has reportedly rejected an unsolicited EUR5.7 billion (US$7.65 billion) bid from Spain’s Telefonica for its stake in Vivo, the Brazilian mobile operator that is jointly owned by both firms. According to a Financial Times report, Portugal Telecom said in a statement that its board met yesterday to discuss the “unsolicited, binding and unconditional offer,” which is valid until 6 June. “Vivo is an essential asset for PT’s strategy and the sale of this stake would go against PT’s long-term growth strategy,” the statement said, adding that the board had rejected the offer unanimously. The bid formally involves PT’s 50 percent stake in Brasilcel – a holding that controls 60 percent of the Brazilian operator. Vivo is Brazil’s largest mobile operator and Brasilcel is a 50/50 joint venture between the two European operator groups

It is not the first time that Telefonica has attempted to buyout Portugal Telecom in Brazil. The Portuguese firm reportedly rejected an offer from Telefonica valued at more than EUR3 billion to buy its stake in 2007, and relations between the two shareholders has often been strained. Telefonica’s latest push is understood to be part of a drive to more closely integrate Vivo with its Brazilian fixed-line arm Telesp, which is facing heightened competition. According to reports last month, Telefonica has approached Portugal Telecom to forge closer ties between Telesp and Vivo in areas such as network, marketing and back office functions, which it says could generate significant cost savings for both subsidiaries.

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