Telefonica Tries Convincing PT Shareholders

Spain-based Telefonica will start a roadshow tomorrow to try and convince shareholders of Portugal Telecom (PT) to accept its offer for a stake in Vivo Participacoes, confirms a source close to the potential buyer. “Telefonica has always said that its offer made is a fair one. Now it will explain this to the shareholders,” he says. Telefonica on May 6 offered to acquire a 50% stake in Brasilcel, the controlling shareholder of Vivo Participacoes, for EUR5.7bn in cash. PT rejected the offer, saying 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 has said it believes the offer is positive for Vivo shareholders by establishing a reference price that is 2.4x higher than market.