SonaeCom-PT deal raises the stakes in Portugal

SonaeCom’s hostile E13.9bn (£9.39bn) bid for Portugal Telecom (PT) is raising competition, regulatory, commercial and political issues never seen before in Portugal.

A swathe of firms is advising on the bid, while there is preparation for a counter-offer from a private equity consortium said to include Blackstone, Cinven, Kohlberg Kravis Roberts & Co, Permira, Providence Equity Partners and Texas Pacific Group.

In total six firms are advising PT on different aspects: Cleary Gottlieb Steen & Hamilton, Cuatrecasas, Garrigues, Pereira Leal Martins Júdice & Associados, Simpson Thacher & Bartlett and Vieira de Almeida & Associados.

SonaeCom has instructed Morais Leitão Galvão Teles Soares da Silva, Osorio de Castro and Skadden Arps Slate Meagher & Flom, while Linklaters is advising Santander as financial adviser. The private equity group has appointed a range of smaller law firms, coordinated by Freshfields Bruckhaus Deringer.

This comes at a time of fierce debate over government reforms (intended to apply the EU Takeover Directive with its more favourable approach to hostile takeovers), with discussion over differences between Portuguese company law and EU regulation forcing intervention from the capital markets regulator.

Competition lawyers suggest that the counter-bid is likely to trigger a European Commission investigation.

Whatever the end result, such deals still place Portugal on the European M&A map. According to one Lisbon lawyer: “Private equity groups will be looking more closely at next year’s big privatisation programme, and international law firms will be asking if they need resource in the country.”