Portugal Telecom / Telefónica
Telefónica’s (twice sweetened) offer was bigger than Portugal Telecom’s entire pre-bid market capitalisation. It valued Vivo at about 35 times this year’s expected earnings. While Vivo is undeniably PT’s best asset, offering decent growth in one of the world’s most promising emerging markets, Telefónica was offering more money than PT could ever expect to reap from staying put. If the government’s veto stands, in contrast, PT could end up stuck in a relationship with the Spaniards that has gone from fractious to downright abusive. Vivo would surely suffer under such management.