Sonaecom’s new offer is still a joke PT investor says

16 Feb 2007

Sonaecom has raised its takeover offer for Portugal Telecom from EUR9.50 per share to EUR10.50 per share, valuing PT at EUR11.8 billion. In a statement, Sonaecom said: ‘During its direct contacts with PT shareholders, Sonaecom found that some were really not ready to sell their shares at a price of EUR9.50, which naturally made the operation less certain.’ It added that the new offer price is its ‘definitive limit’. The firm had said on a number of occasions that it would not increase its original price.

Although the new offer is above PT’s trading value, which ended Thursday at EUR10.29, there have already been suggestions that it is still too low for some PT shareholders. Banco Espirito Santo holds around 8% of PT shares, but a company spokesperson told Reuters that the bank would still reject the higher offer, while a similar position was taken by private investors Nuno Vasconcellos and Joe Berrardo, who own around 3% and 2% of PT respectively. ‘They are still joking around,’ Berrardo told Reuters. A PT shareholder meeting has been called for 2 March to discuss the takeover bid. The offer period closes a week later.

Meanwhile, PT has said that it sees the synergies of uniting its own mobile operation TMN with Sonaecom’s cellular unit Optimus at between EUR2.6 billion and EUR2.9 billion, well above analyst estimates of around EUR2 billion. Putting a higher value on potential synergies would support Portugal Telecom’s view that Sonaecom’s offer is an undervaluation. PT says it commissioned an independent study to determine the level of synergies that could be expected from uniting Portugal’s largest and third-largest cellcos. A combined operation would claim around 70% of the country’s mobile subscribers, by far the highest market share in any developed market.