Zon, Optimus Merger May Save as Much as $533 Million
Zon Multimedia SGPS SA (ZON) and mobile- phone unit Optimus SGPS agreed to a merger, paving the way for as much as 400 million euros ($533 million) in savings as economic recession in Portugal continues to weigh on revenue.
Zon is Portugal’s biggest cable-television provider while Optimus, a unit of Sonaecom SGPS SA (SNC), is the country’s smallest mobile-phone operator. The new company will compete against Portugal Telecom SGPS SA (PTC) and Vodafone Group Plc (VOD) for cable- television, Internet, and telephone clients in Portugal.
“The board of directors of the participating companies estimate that the created value shall range between 350 million euros and 400 million euros,” Zon said yesterday in a regulatory filing. The merger will also help counter “enormous pressure on revenue” in the industry, it said.
Portugal’s economy is forecast to shrink 1.9 percent in 2013 after declining an estimated 3 percent in 2012, the Bank of Portugal said on Jan. 15. Zon’s revenue increased 0.4 percent to 858.6 million euros in 2012 from the previous year, the company said in a separate statement yesterday.
“In 2013 the domestic business will continue to feel some pressure,” Jose Pedro Pereira da Costa, Zon’s chief financial officer, said in an interview. “The international business will expand in a positive way and compensate for the less positive tendency in the domestic business.”
Zon Optimus (MLOPT) SGPS SA, as the new company will be named, is expected to control about 26 percent of the Portuguese telecommunications sector, Zon said. The deal values Zon at 1.5 times the value of Optimus, it said.
“Zon will increase its share capital and, as a consequence thereof, issue and grant to the shareholders of Optimus new shares representing 40 percent of the share capital of Zon,” Zon said.
Zon shares were unchanged at 3.271 euros at 10:32 a.m. in Lisbon while Sonaecom rose 0.5 percent to 1.534 euros.
Sonaecom said on Dec. 14 it had reached an agreement with Angolan investor Isabel dos Santos to recommend a merger of Optimus and Zon. Dos Santos is the biggest shareholder in Zon, with a 28.8 percent stake in the company.
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. Zon has a stake of 30 percent in Angolan cable-television provider ZAP.
“A remarkable effect of the projected merger will come from the creation of conditions for a significant improvement of the internationalization commitment,” Zon said. The merger still needs the approval of the competition authority in Portugal, the company said.
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