Portugal Telecom to sell Vivo stake to Telefonica for $9.8 bn

Spanish telecommunications giant Telefonica today finally won the three-month battle for Portugal Telecom's 50-per cent stake in Brazil's leading mobile operator Vivo after it raised its bid for the third time to $9.8 billion (€7.5 billion).

According to Portuguese local media reports, the latest offer from Telefonica for whole of Vivo, which is close to Portugal Telecom's market capitalisation of €37 billion, has the blessings of the Portugal government as well as the board of Portugal Telecom.

This is the first bitterly fought overseas acquisition to go through this year, where the bid had to be raised three times and Telefonica had to finally pay nearly $3 billion more than its initial offer.

In the deal that was announced today by the Spanish securities regulator, Telefonica will make an upfront payment of €4.5 billion in cash, and the remaining amount in cash in two stages.

The culmination of the deal ends a potential lengthy and costly court battle, which could have dragged on for years and also embarrassed the Portuguese government.

In May, Madrid-based Telefonica, which provides its services in Europe and Latin America, had offered to buy Portugal Telecom's 50 per cent stake in Vivo for $6.9 billion, which was instantly rejected by Portugal Telecom.