June 2 (Bloomberg) -- Ongoing Strategy Investments SGPS SA spent about 250 million euros ($362 million) to boost its Portugal Telecom SGPS SA stake to 10.05 percent, becoming the No. 2 investor at Portugal’s biggest telecommunications company.
“This was our strategy from the beginning” as “we wanted to become one of the largest shareholders,” Chief Executive Officer Nuno Vasconcellos said in a telephone interview today. The closely held Portuguese investment company raised its stake from 6.77 percent. Capital Research and Management Co. is Portugal Telecom’s biggest investor, with a 10.09 percent stake, according to the phone company’s website.
The operation was financed by banks outside Portugal, Vasconcellos said. Ongoing began buying Portugal Telecom shares in 2006, when it backed the company in successfully fighting off a hostile takeover from smaller rival Sonaecom SGPS SA. It became the company’s fifth-biggest shareholder and second biggest Portuguese investor the following year and has two seats on the board.
Portugal Telecom is a “very liquid company, it has a very good balance sheet,” Vasconcellos said. “It’s the kind of company where you want to be an investor.”
The increase of Ongoing’s stake comes at a time when the Portuguese state is committed to giving up its “golden share” rights by the end of July, as part of the external aid package the country agreed on with the European Union and the International Monetary Fund.
“We are reinforcing the controlling shareholder group,” Vasconcellos said, adding the timing is “a coincidence.” Another leading Portuguese shareholder, Banco Espirito Santo SA, owns a 10.03 percent stake, according to the Portugal Telecom website.
Portugal’s government used its veto powers once, to block the sale of Portugal Telecom’s share in a joint venture that controlled Brazil’s Vivo Participacoes SA. The company later sold the stake for a higher price after agreeing to buy a stake in Tele Norte Leste Participacoes SA, another Brazilian phone company, known as Oi.
Oi has also become a shareholder of Portugal Telecom and intends to buy a stake of as much as 10 percent.
“It’s very welcome,” Vasconcellos said, referring to Oi. “It’s very good for the company.”
Ongoing was set up in 2004 to manage the Rocha dos Santos family fortune. The company publishes daily newspapers Diario Economico in Portugal and Brasil Economico in Brazil, has a 23 percent stake in TV broadcaster and publisher Impresa SGPS SA and a 3.45 percent stake in cable television company Zon Multimedia SGPS SA.
It bid for Grupo Media Capital SGPS SA, owner of Portugal’s most-watched television station last year but didn’t go through with the acquisition, after failing to sell the Impresa stake. Selling Impresa was a regulatory condition, at the time, for the purchase of a stake in rival Media Capital.
--Editors: Jim Silver, Robert Valpuesta
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