By Rogerio Jelmayer and Ruth Bender
SÃO PAULO--Private equity firms Apax Partners and Bain Capital
LLC made a joint bid to buy PT Portugal from its Brazilian owner,
the telecommunication firm Oi SA, a move that could spark a bidding
battle over the Portuguese telecom assets with rival suitor Altice
SA.
The offer made by the private-equity firms value the assets at
an enterprise value of EUR7.07 billion ($8.8 billion) on a cash and
debt-free basis, Oi said on Wednesday.
The offer includes an earn-out payment of EUR400 million related
to future revenue generation, as well as a EUR400 million payout
related the future generation of earnings before interest, taxes,
depreciation and amortization.
The proposed deal value is slightly higher than the one made by
Luxembourg-based Altice SA earlier this month, which proposed
EUR7.03 billion for the same assets.
Both offers exclude PT Portugal's African assets, as well as
Portugal Telecom's Rio Forte debt securities.
Oi's board will evaluate the offers, but it didn't disclose a
timetable for the board to conclude its evaluation.
The offer made Wednesday is one more chapter in the complex
consolidation process under way in Brazil's telecom industry, which
started last year when Oi agreed to merge its operations with
Portugal Telecom.
Portugal Telecom transferred its fixed and mobile telephone
assets to Oi when the two firms merged. It resulted in two
companies, with PT Portugal holding real assets, while the other
company, called Portugal Telecom SGPS, is a holding company with a
25.7% stake in Oi.
Earlier this week, a holding company controlled by a daughter of
Angola's president offered EUR1.21 billion to take over Portugal
Telecom SGPS, the company that has a 25.7% stake in Oi. Oi rejected
it just a few hours after the offer, saying that it was
inappropriate.
Although Portugal Telecom SGPS has veto power to evaluate any
bids involving Oi's assets, since it is a relevant shareholder.
Separately, Oi is trying to sell its assets in Africa too.
The sale of assets outside Brazil is part of Oi's strategy to
cut its high debt and concentrate its efforts in the consolidation
of Brazil's telecom industry.
Buoyed by the expected cash raised from asset sales, Oi plans to
join forces with Spain's Telefónica SA and Mexico's América Móvil
SAB to make an offer to acquire Telecom Italia SpA's local unit,
Tim Participações, according to two people close to the talks.
The split of Tim Participações among the three other companies
is likely to take place to avoid antitrust issues in Brazil. TIM
has a market value of 30 billion Brazilian reais ($11.7 billion)
and the combined offer of the three companies is likely to be
"slightly above this value," one of the person said.
Oi is in a difficult financial position. The company reported a
second-quarter net loss of 221 million Brazilian reais, compared
with a loss of 124 million reais in the corresponding period a year
earlier. Moreover, Oi ended the second quarter with debt of 46.2
billion reais, up from 30 billion reais in the year-earlier
period.
Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com and Ruth
Bender at Ruth.Bender@wsj.com
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