Portuguese conglomerate Semapa joins Bain and Apax to acquire Portugal Telecom

Portuguese conglomerate Semapa (Sociedade de Investimento e Gestao) is joining with private equity firms Bain Capital and Apax Partners in their €7.075 billion ($8.8 billion) bid for PT Portugal SGPS SA (PT) operations in Portugal-owned by Brazilian telecom company Oi SA.

Semapa, an industrial holding company with interests in forestry, energy, paper pulp, paper, and cement, said in a release that it has teamed up with Bain and Apax to bid for PT, and added that it would probably buy between 5 per cent and 10 per cent of PT.

''Under Article 248 of the Securities Code, we hereby inform that Semapa executed on November 26, 2014 a memorandum of understanding, in order to be able to take part, together with investment funds represented by Apax Partners LLP and by Bain Capital Europe, LLP, in the acquisition of PT Portugal SGPS, S.A. entire share capital,'' it said in the release.

''The participation that Semapa may be entitled in the referred investment, still to be defined, is expected to be between five and ten per cent,'' the release added.

On 12 November, Bain and Apax tabled a €7.075-billion bid for the Portuguese business unit of PT, rivaling an offer from European telecoms group Altice. (See: PE firms Bain, Apax table $8.8-bn rival bid for Portugal Telecom's Portuguese unit)

The bid includes an earn-out payment of €400 million based on future revenue generation, and a €400-million payout related to the future generation of earnings before interest, taxes, depreciation and amortization.

The proposed offer is slightly higher to that of Altice, the Luxembourg-based telecom investment vehicle founded by French cable king Patrick Drahi, which had earlier tabled a €7.025 billion buyout for PT and included similar earn-out payments. 

In October last year, Portugal Telecom and Oi agreed to merge their operations to form a new Brazil-based company with more than 100 million subscribers.

Under the merger, Oi got PT's assets, while the new holding company Portugal Telecom SGPS got a 25.7 per cent stake in Oi.

To complicate the sale, Isabel dos Santos, the daughter of the Angolan president since 1979, José Eduardo dos Santos, had also earlier made an €1.35 per share buyout offer amounting to €1.2 billion for Lisbon-listed holding company Portugal Telecom SGPS, which holds the 25.7-per cent stake in Oi.

If her bid is successful, Isabel dos Santos, Africa's richest woman, will become a major shareholder in Oi, and will torpedo the sale of Oi's sale of PT Portugal business.

Her buyout conditions include acquiring over 50 per cent and no major changes such as a sale of strategic assets.

Oi has rejected her offer, saying it was inappropriate since the sale of PT was decided months earlier.

Oi is seeking to sell PT and other assets in Africa in order to reduce huge debts and focus on its operations in Brazil.

PT is the largest provider of fixed line phones and broadband in the country, with a 52-per cent share. It also holds 41.5 per cent of the mobile market followed by Vodafone with 41.6 per cent and NOS with 16.9 per cent.