Portugal Telecom becomes Telefonica takeover target

Telefonica is prepared to make a hostile takeover bid for Portugal Telecom to win a battle for control of Brazilian mobile carrier Vivo, executives at the firm revealed yesterday.
The firm said that buying its Portuguese rival is one of several alternative courses of action it might take if PT continues to ignore a €5.7 billion offer the Spanish incumbent made to buy it out of Vivo, in an official statement made to Portugal’s regulator CMVM, the New York Times reports.
Other options include blocking dividend payments from Vivo to PT, WSJ.com reports.
The Spanish giant is piling pressure onto PT’s management to accept its offer, by also lobbying PT’s shareholders to demand an EGM to discuss the deal.
Telefonica could see synergies worth €2.8 billion by combining Vivo with its Brazilian fixed-line business.
In addition to the €5.7 billion offered to buy PT’s 50% stake in Brasilcel – which owns 60% of Vivo -, Telefonica tendered €600 million for outstanding Vivo shares.
The combined figures value Vivo around 140% above its current market capitalization.