This case scenario is set out in the February month of 2006, succeeding the declaration by Sonaecom’s of its takeover bid for the Portugal Telecom of EUR 9.50 per share. The reader will not yet know how PT will react and whether its management will accept the offer or not. How will PTs board view this bid? On one side it signifies a 20% premium over the earlier stock price.
On the flip side, it is a horrible blow to the global aspirations of the PT group. Also, the occasionally contradictory views of workers, the competition regulator, the general public and also the authorities possess the capacity to complicate matters further. This deal also has significant international implications. One thing is certain. Given all the outside pressure, for example from regulators, nothing will be the Sonae Group following this offer or the same for PT. The case serves as a demanding application of valuation methodology with a concentration on understanding the problems in predicting future cash flows and also the susceptibility of the valuation analysis to underlying assumptions.
SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) case study solution
PUBLICATION DATE: January 01, 2012 PRODUCT #: IMD652-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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