European News

28, Jul 2010.

Telefonica SA reached a preliminary agreement to buy Portugal Telecom SGPS SA’s stake in Brazil’s Vivo Participacoes SA for 7.5 billion euros ($9.8 billion), a person close to the negotiations said.

The accord was reached late yesterday and the boards of both companies have yet to ratify it, said the person who declined to be identified before an official announcement. Madrid-based Telefonica holds its monthly board meeting today.

Telefonica Chairman Cesar Alierta has had to raise the bid three times to gain control of Vivo, Brazil’s largest wireless company. Alierta wants to merge Vivo with Telecomunicacoes de Sao Paulo SA, or Telesp, the Spanish company’s fixed-line unit in Brazil.

Portugal Telecom shares were suspended from trading, Euronext said today. A Telefonica spokeswoman declined to comment. Calls to Portugal Telecom’s press office and investor relations departments weren’t immediately returned.

Brasilcel NV, Telefonica and Portugal Telecom’s 50-50 venture, owns 60 percent of Vivo.

The agreement was reported earlier today by newspaper El Pais. Portugal Telecom will use about half of the proceeds to buy a stake of between 20 percent and 25 percent in Tele Norte Leste Participacoes SA, known as Oi, El Pais said, citing unidentified people close to talks.