Brazilian Regulator Throws Spanner at Oi/Portugal Telecom Merger

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The planned merger of two of Brazil's telecoms networks may be held up after the stock market regulator blocked the two largest shareholders from setting the price of their network assets.

Brazil's Oi and Portugal Telecom had planned to use asset prices approved by their largest investors to help determine the distribution of shares in the merged company.

However, the stock market regulator ruled that this could disadvantage the company's smaller shareholders and blocked the decision. The decision was taken by technical staff and still needs to be formally upheld by the regulator, although that is usually just a formality.

The smaller shareholders have been protesting against the merger, which they claim is not being priced to their advantage. Under the terms of the deal, new shares would be issued to pay off the debts of the majority owners, but the smaller shareholders were not expected to benefit directly from that.

The upside would have been a much simpler shareholder structure though, as the structures are somewhat complex at the moment.

The merger was also seen as necessary to be completed if the two companies are to compete with their rivals, or participate in a possible break-up of Telecom Italia's local subsidiary -- if such an event were to take place.

On the web: Bloomberg News

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Tags: oi  portugal telecom  Brazil 

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