Brazil's Vivo Soars Following Telefonica Buyout Bid
May 11 2010 - 10:35AM
Dow Jones News
Share price of Brazil's top mobile phone operator Vivo (VIV,
VIVO4.BR) rose sharply Tuesday after Spanish telephone giant
Telfonica (TEF) EUR5.7 billion bid to buy out its partner in Vivo,
Portugal Telecom (PT).
Despite Portugal Telecom shareholders unanimously rejecting the
bid, shares in Vivo rose 7.6% to 48.90 Brazilian real in late
morning trading on the Brazilian Stock Exchange, or Ibovespa.
The offer is a rich one, analysts said. According to Telefonica,
it implies a valuation of 112.29 Brazilian reals for each Vivo
voting share owned by PT, a premium of about 145% on the average
share price in the month prior to the offer.
"Even with the PT rejection of the offer, we view the news as
positive as it completely alters the valuation of Vivo," said the
Sao Paulo-based Link Investimentos brokerage.
It is unclear whether Telefonica would have to make a tag-along
offer to minority shareholders.
The bid clearly shows the importance of the Brazilian market to
both companies and opens up the possibility of a further offer.
-By Alastair Stewart; Dow Jones Newswires; 5511 3145-1479;
alastair.stewart@dowjones.com
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