EU ruling revives Telefonica’s €7.15B ($9.04B) bid for Portugal Telecom stake in Brazil’s Vivo

EU ruling revives Telefonica bid for Brazil’s Vivo

LISBON, Portugal — Portugal Telecom says it is open to negotiations with Telefonica over the Spanish company’s euro7.15 billion ($9.04 billion) offer for PT’s stake in Brazil’s leading cell phone company, Vivo.

“We have to be pragmatic and find the best solution for everyone involved,” PT executive president Zeinal Bava said Thursday after the European Union Court of Justice ruled that the Portuguese government’s use of special voting rights to block the deal was illegal.

“In my view and in the view of PT’s board we have to act in accordance with the facts,” Bava told reporters after the court announced its ruling in Luxembourg.

“The facts are known and, above all, we have to look for a way forward,” Bava said, adding that PT was ready to reach an understanding with the Spanish company over its unsolicited bid.

Telefonica said in a statement late Wednesday it is “willing to continue looking for possible solutions to take this operation to a good ending, as long as there is equal availability from Portugal Telecom to this effect, in a way in which both parties feel comfortable.”

PT’s board had opposed Telefonica’s bid for its 50 percent stake in Brasilcel, a holding company which in turn owns 60 percent of Vivo. Telefonica owns the other 50 percent of Brasilcel.

But last week PT shareholders voted to accept the offer, by 74 percent to 26 percent. The center-left government then stunned the market by vetoing the deal, using rights attached to its so-called “golden share” in PT which grants it the final say in strategic decisions.

The EU court said the veto was unfair. It scared away investors and hindered the free movement of capital in the bloc, the court said.

Pedro Silva Pereira, Minister for the Cabinet, said the goverment would examine the best way to proceed.

“A new phase is now opening in this process,” Silva Pereira told a news conference. “The state, through the government, will look for the solutions which best ensure respect for European law but also safeguard the national interests that are at stake.”

The European Commission has for years fought the bloc’s governments over market interference through special voting rights, which often are left over from privatizations.

Portuguese Prime Minister Jose Socrates earlier this week accused the Commission of pursuing “ultraliberal” economic policies.

PT replied that it was willing to talk, adding that Vivo’s success showed the two Iberian companies were able to work well together in Brazil.

PT’s shares fell 0.67 percent to euro8.59 after the ruling. Telefonica was up 0.41 percent at euro16.04.

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Associated Press writer Ciaran Giles in Madrid contributed to this report.