An agreement setting out the principles for a merger between Portugal Telecom (PT) and Brazilian telecom group Oi was signed Wednesday to create a new company called CorpCo, the Portuguese group said.
The agreement is intended to turn the various companies into “a single integrated and listed Brazilian company,” said PT in a statement filed with Portuguese sock market regulator Comissão do Mercado de Valores Mobiliários (CMVM), adding that CorpCo would benefit from scale and its market leading position in both Portugal and Brazil.
The statement said that the merger was a natural development of the industrial alliance established in 2010 between the two groups, and that the move was backed by PT’s two main shareholders, BES (Avistar) and Ongoing (Nivalis), which also signed the agreement.
CorpCo, which will have its headquarters in Brazil, will benefit from “Oi’s unique coverage in Brazil,” and “Portugal Telecom’s experience in the Portuguese market,” making it possible to “crystallize growth opportunities around convergence and mobility in Brazil.”
“Oi proposes to carry out a capital increase in cash of a minimum of 7 billion reals (2.3 billion euros) and a goal of 8 billion reals (2.7 billion euros), in order to improve the flexibility of CorpCo’s balance sheet,” the statement said.
Shares in the new company will be listed in the New Market segment of the Brazilian Stock Exchange (BM&FBOVESPA), as well on NYSE Euronext and the New York Stock Exchange. (macauhub)