Sonaecom, Dos Santos Reach Agreement on Merger of Zon, Optimus

Sonaecom SGPS SA (SNC) said it reached an agreement with Angolan investor Isabel dos Santos to recommend a merger of its Optimus SGPS SA wireless unit with Zon Multimedia SGPS SA (ZON), Portugal’s biggest cable-television provider.

The merger, “based on the incorporation of Optimus SGPS into Zon,” will be recommended to the boards of Zon and Optimus, Sonaecom said today in a regulatory filing. Sonaecom and Dos Santos said they consider “acceptable” an exchange ratio giving Zon a valuation equal to 150 percent of Optimus’s. They said they’re open to a different ratio, based on the opinions of Optimus and Zon’s management.

Sonaecom, based in Senhora da Hora, northern Portugal, owns Optimus, Portugal’s smallest mobile-phone operator, and dos Santos is the biggest shareholder in Zon, with a 28.8 percent stake held through Kento Holding Ltd. and Jadeium BV. Portuguese retailer Sonae (SON) SGPS SA, Sonaecom’s parent company, last year formed a partnership with a dos Santos-controlled company to open a chain of hypermarkets in Angola.

Sonaecom slipped 0.5 percent to close at 1.54 euros in Lisbon before the announcement, valuing it at 562.6 million euros ($741 million). Zon fell 0.4 percent to 2.81 euros, giving the Lisbon-based company a market value of 869.8 million euros.

A merged company would have better capacity to invest in new markets and new products, Sonaecom said in the statement.

Sonaecom and Zon are “completely complementary,” Sonaecom Deputy Chief Executive Officer Miguel Almeida said in a Sept. 21 interview. “For the past four years we have defended” the idea of a merger, he said. Zon CEO Rodrigo Costa repeatedly said he was focused on organic growth.

Zon was spun off from Portugal Telecom SGPS SA (PTC) following Sonaecom’s failed bid for the former national phone monopoly in 2007. Sonaecom competes with Portugal Telecom’s TMN mobile unit and Vodafone Group Plc for mobile customers in Portugal. Zon also competes with Portugal Telecom’s Meo cable unit.

To contact the reporter on this story: Joao Lima in Lisbon at jlima1@bloomberg.net

To contact the editor responsible for this story: Stephen Foxwell at sfoxwell@bloomberg.net

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