Bloomberg News

Telemar Participacoes Units Advance on Merger Plan Details

August 01, 2011

(Updates with closing prices in second paragraph.)

Aug. 1 (Bloomberg) -- Tele Norte Leste Participacoes SA and Telemar Norte Leste SA advanced in Sao Paulo trading, while Brasil Telecom SA tumbled after they released details of a plan to merge into a single entity.

Tele Norte Leste common shares jumped 4.4 percent to 25 reais at the close of trading at 4:15 p.m. New York time, the best performance on the Bovespa index. Preferred shares of Telemar climbed 1.7 percent to 45.50 reais. Brasil Telecom tumbled 2.8 percent to 12.75 reais. Brazil’s benchmark equity gauge fell 0.5 percent.

Parent company Telemar Participacoes SA said on May 24 it plans to merge its three units into one entity that will be Brazil’s largest fixed-line telephone service provider. The companies set the ratio prices for the restructuring today.

“It seems like investors are saying that the ratio proposed isn’t very good for Brasil Telecom shareholders,” Rosangela Ribeiro, an analyst at SLW Corretora in Sao Paulo, said in a telephone interview.

Each Tele Norte common shareholder will receive 2.3122 Brasil Telecom common shares, according to the proposal announced today. Tele Norte Leste Participacoes’s preferred stock will be exchanged for 2.1428 Brasil Telecom preferred shares and 1.8581 Brasil Telecom common shares, according to a statement from the companies.

Each Telemar Norte common share will be exchanged for 5.1149 of Brasil Telecom’s similar stocks. Telemar Norte Leste’s preferred stocks will receive 3.8620 Brasil Telecom common shares and 4.4537 Brasil Telecom’s preferred stocks, according to the statement.

Ratio prices were set by independent committees, according to the statement.

--Editors: Richard Richtmyer, Marie-France Han

Felipe Frisch in Sao Paulo at

To contact the reporter on this story: Ney Hayashi in Sao Paulo at

To contact the editor responsible for this story: Francisco Marcelino at

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