Conversation with Sonaecom IR – 30 October 2013
* Offer background: Sonaecom became the owner of a direct interest of ~37.5m (~7.3%) shares in Zon Optimus (ZONOP PL) as a result of a merger of Optimus SGPS and Zon Multimedia.
* Offer terms: ZONOP shares of ~37.5m will be distributed to Sonaecom shareholders. > If acceptance into the offer is ~86% of Sonaecom share capital every accepting shareholders will receive ZONOP shares [in this case the maximum number of ZONOP shares received would be 0.48228346 and zero cash] > However, if the acceptance exceeds ~86% level, the shares will be pro-rated and a cash element will be included. > Sonaecom IR said that the company has adequate cash to meet the offer consideration.
* Conditions to the offer > Approval of CVM - The IR does not expect any hurdles > Sonaecom shareholder approval - The IR explained that the resolution is to get approval from Sonaecom shareholders to allow Sonaecom to increase the holding of its own shares post offer. - Majority required is 50.001% of the share capital present at the meeting – But the IR said would need to check this. o Sonaecom’s major shareholder, Sonae SGPS SA (holds ~74%), is likely to be allowed to vote at the EGM, o But the IR said that she would need to check this again.
* Next update: The IR said more update on the EGM and other matters relating to the offer will be released by end of this week.
* Offer timeline: As per the IR the offer will close with settlement by end 2013 or early January 2014. > The IR insisted that the most likely deal close will by end 2013.
* Offer price: The IR thinks the offer price is fair and reasonable. > Also, the IR is of the view that acceptance into the offer is likely to be high.
Comment:
The value of offer consideration is fixed at €2.45 a share. Depending on the total level of acceptance into the offer, the number of ZONOP shares received by SNC minority shareholder will vary. > Assuming all the minority shareholders accept into the offer, we estimate (at current ZONOP price of €5.18) that offer terms would be 1 SNC PL = 0.42370 ZONOP PL + €0.2569 (will vary depending on ZONOP share price). - At current price level, we estimate a spread of ~0.65% (~4.0% pa) assuming settlement by end Dec 13. We believe this is bit tight for a position in SNC.