PT seemingly defenceless against looming Sonae take-over

PORTUGAL TELECOM (PT) denied last week that it is employing the services of several banks to advise it on the possible sale of its internet and cable television unit PT Multimedia.

The sale of PT Multimedia may be the only way that PT can effectively stave off a hostile 10.7 billion euro take-over bid for PT’s 1.13 billion shares by Belmiro de Azevedo’s SonaeCom SGPS and Sonae SGPS conglomerate announced on February 6.

The Portuguese government is under increasing pressure from Brussels to force PT to sell off some of its subsidiary telecommunications arms because, in its present form, the company represents a monopoly that does not encourage healthy market competition.

The government seems to be powerless to stave off the hostile bid, or Oferta Pública de Aquisição (OPA), although Finance Minister Teixeira Santos said there were reasons for the government to keep its so-called 500 Golden Shares in PT and is examining a loophole clause under the Treaty of Rome.  PT, for its part, says it will do everything it can to block the take-over operation because it “undervalues the company”.

However, things are not going well for PT following news that financial wizard Peter Golub of Merrill Lynch Inc, who was placed on the non-executive Board of Directors to prepare a strategy of defence against the take-over, resigned. No reason was given.

In a statement, PT did admit that it had been negotiating with various financial institutions for purely advisory services within the context of the Sonae bid which wants 100 per cent of the telephone operator.

Sonae has also launched a separate bid worth 698 million euros for Portugal Telecom Media, but says that the offer hangs on the main PT take-over bid going forward.