PT Shuns Telefonica Bid for Vivo

Portugal Telecom (PT) has rejected Telefonica’s offer to acquire a 50% stake in Brasilcel, the controlling shareholder of Vivo Participacoes, for EUR5.7bn in cash. PT says Vivo is part of long-term growth plans. Brasilcel, which has 60% of Vivo, is 50% owned by Telefonica and 50% by PT. Telefonica says it will launch a tender offer to buy all Vivo shares not held by Brasilcel, for EUR600m. This represents 11.1% of all ordinary shares and 3.8% of Vivo’s total capital stock, says Telefonica. The price per common share is equivalent to 80% of the value attributed to each share owned by Brasilcel. The offer expires June 6. Credit Suisse says it sees the offer as positive for Vivo shareholders by establishing a reference price that is 2.4x higher than the current market price. “The Telefonica offer should be a positive catalyst for Vivo shares by underscoring their highly discounted valuation and the strategic value of Vivo to its controlling shareholders,” the shop says. Credit Suisse has an outperform rating on Vivo. Vivo’s common shares closed Tuesday at BRL58.30, up 34% on the day, according to the Bovespa.