Spain’s Telefonica has stepped up pressure on Portugal Telecom (PT) – its joint-venture partner in Brazilian mobile operator Vivo – hinting that it could launch a hostile takeover of the Portuguese firm if it cannot persuade it to sell its stake in Vivo. “It [a hostile takeover bid] could always be revisited… We have never said ‘we will never go hostile’,” Santiago Fernandez Valbuena, Telefonica’s finance director, told the Financial Times. He said the Spanish group could also move to block the Portuguese company’s access to dividends from the Brazilian joint venture. PT’s board rejected an unsolicited EUR5.7 billion (US$7.65 billion) bid from Telefonica for its stake in Vivo earlier this month. Telefoncia has said it will not raise its offer, but because the Spanish group is PT’s largest shareholder (with a 10 percent stake) Valbuena believes a hostile takeover bid could be an option. He said the two companies were in an “unhappy marriage” in Brazil.
Telefonica’s latest push is understood to be part of a drive to more closely integrate Vivo with its underperforming Brazilian fixed-line arm Telesp. According to reports last month, Telefonica has approached PT 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. Telefonica and PT jointly own Brasilcel, a holding company with a controlling stake in Vivo. Telefonica’s offer to buy PT’s 50 percent shareholding in Brasilcel for EUR5.7 billion represents a 109 percent premium to the stake’s fair value, according to Bernstein analysts. They added that an increased offer of between EUR6.2 billion to EUR7.5 billion might win PT over. According to a Reuters report, shares in PT jumped 6 percent yesterday in response to the takeover speculation.
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