Portuguese state blocks Telefonica takeover bid

1st July 2010, Comments 0 comments

The Portuguese government blocked on Wednesday a bid by Telefonica of Spain to acquire a stake in Brazilian telecom operator Vivo held by Portugal Telecom (PT), the Lusa news agency reported.

The government has a special blocking right in PT through its so-called "golden share" designed to prevent a hostile takeover.

Telefonica said in a statement that the government's decision and the use of the "golden share" was "illegal and in violation" of regulations in Portugal and the European Union.

Shareholders in Portugal Telecom voted by a large majority at a general assembly to accept Telefonica's offer to buy PT's 50-percent stake in Brasilcel, the holding company controlling 60 percent of Vivo.

Just hours ahead of the meeting, Telefonica, which already holds a 50-percent stake in Brasilcel, increased its offer from 6.5 billion to 7.15 billion euros (8.7 billion dollars).

After the government's decision, Telefonica said it was extending the acceptance period of its bid to July 16.

Portuguese Prime Minister Jose Socrates told parliament last Friday that he had given instructions to the public bank Caixa general de depositos, a leading shareholder in Portugal Telecom, to vote against the Spanish offer.

He also said earlier this month that the government's "golden share" in PT was "there to be used when necessary."

© 2010 AFP

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