Brazil Telemig,Tele Norte Holders Reject Bid To Sell Stakes
Dow Jones Online News, 05/31/2001 13:32
SAO PAULO -(Dow Jones)- Key shareholders in Brazilian wireless companies Telemig Celular Participacoes SA (TMB) and Tele Norte Celular Participacoes SA (TCN) late Wednesday rejected a takeover bid from Brazilian private equity fund Opportunity.
Local pension funds declined Opportunity's overture to buy up certain pension funds stakes in the wireless firms, partly because Opportunity's offer didn't specify a price tag for the deal.
At the same time, the pension funds said that if any negotiations were to occur, two investment banks would need to evaluate the value of the holdings. Also, the pension funds said in any negotiations it would like an option to buy up Opportunity's stakes in Telemig and Tele Norte.
Opportunity says it is not a seller and that its offer still stands.
In early May, Canada's Telesystem International Wireless Inc. (TIWI) and the pension funds legally wrestled control of the two carriers away from Opportunity, following a series of bitter legal battles.
Currently, Opportunity has about 27% of the holding company controlling Telemig and Tele Norte. TIW has about 49% of the holding company, and the pension funds have the rest. Recent court rulings severed contracts that tied up Opportunity's stakes with the pension funds and gave Opportunity control of the carriers.
Under existing Brazilian corporate law, premiums in takeover deals are only required to be paid to controlling shareholders, while minority shareholders are often paid lower prices.
Telemig and Tele Norte - with their 1.8 million users in Minas Gerais state and Brazil's northeast - are widely seen as takeover targets in Brazil's consolidating wireless sector, which is shaping up to be controlled by a Telefonica Moviles SA (TEM) and Portugal Telecom SA (PT) joint venture, Telecom Americas Ltd. and Telecom Italia Mobile Spa (I.TIM).
The only active buyers of Brazil's wireless sector are considered to be Iberian companies' joint venture and Telecom Americas - which is a joint venture of Mexico's America Movil SA (AMX), SBC Communications Inc. (SBC) and Bell Canada International Inc. (BCICF).
Meanwhile, analysts have speculated that all key shareholders of the two carriers will eventually reach an accord to sell as a group.
-By Terry Wade, Dow Jones Newswires; 5511-3813-1988; terry.wade@dowjones.com
(This story was originally published by Dow Jones Newswires)
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