Tuesday, 13th July 2010 by David Thorley
The European Court of Justice ruling that the Portuguese government wields unjustified influence over Portugal Telecom could open the way for Telefónica′s takeover of its stake in Brazilian wireless operator Brasilcel.
Telefónica will take the matter to arbitration if it is not decided by the end of the week
The government had used its ′golden′ shareholding in the company to block a proposed buyout by Telefónica, but on 8 July the court rejected its claim to maintain special voting rights in the company.
One source close to the deal says the court ruling ′will certainly put pressure on the Portuguese government to reconsider its veto position in the event that Telefónica and Portugal Telecom negotiate a solution for this impasse, which can allow the government an ′honourable exit′.′
According to media reports Telefónica will take the matter to a Dutch arbitration court if it cannot come to an agreement with Portugal Telecom by the end of this week.
At the end of June, 74 per cent of Portugal Telecom′s shareholders voted to accept Telefónica′s US$9 billion bid to take full control of the joint venture, but the government blocked the sale using rights established under its ownership of 500 ′>
Telefónica has retained Machado, Meyer, Sendacz e Opice Advogados to advise on the merger transaction′s Brazilian aspects.
The Brazilian firm has been regular M&A counsel to the Spanish telecoms group since 1998, when it helped Telefónica acquire a controlling stake in a number of companies formerly owned by state-run Telebras.
The company has also hired Uría Menéndez, which is advising on the Brasilcel deal through its Madrid and Lisbon offices, while Cuatrecasas, Gonçalves Pereira is also offering some advice on Portuguese law matters.
Spanish firm Garrigues Abogados is leading the counsel to Portugal Telecom from its Lisbon office.
Although the dispute surrounding the Portuguese government′s right to overturn the decision of Portugal Telecom′s shareholders has caused significant delays and complications to the deal, our sources do not expect the parties to incur excessive legal costs.
One lawyer close to the deal explains, they will simply become more adept in managing their use of external legal counsel, saying, ′In a deal like this, legal fee costs are usually not an issue for the client, who will limit the legal work that needs to be done while seeking various alternatives.′
Such large clients do wield some bargaining power when it comes to fees on large deals, but our source explains, ′That bargaining power is generally exercised at the end of the work, for a reduction of legal fees not yet charged.′
On the other hand, he adds, clients with long-term, large-scale legal needs ′in a big deal like this, fully recognise good legal work, dedication and effort.′
Counsel to Telefónica
Spain
· Uría Menéndez
Partners Cándido Paz-Ares in Madrid and Carlos Costa Andrade in Lisbon
Portugal
· Cuatrecasas, Gonçalves Pereira
Partner Manuel Castelobranco
Brazil
· Machado, Meyer, Sendacz e Opice Advogados
Partner Mosche Sendacz
Counsel to Portugal Telecom
· Garrigues Abogados
Partner Diogo Leonidas in Lisbon
(Latin Lawyer 13.07.2010)
(Notícia na Íntegra)
