Brazil: Oi-Portugal Telecom merger

Brazil’s securities industry watchdog is poised to launch an investigation into Oi SA’s acquisition of Portugal Telecom SGPS SA, on suspicion that key shareholders in both companies were aware of irregularities surrounding the deal, newspaper Valor Econômico said on Tuesday.

The watchdog, known as CVM, will look into whether Oi’s and Portugal Telecom’s controlling shareholders might have known ahead of time about potential losses in Portugal Telecom that ended up souring the transaction, Valor said, citing a document.

CVM will also investigate the sale of the advertising arm of IG, an Internet company controlled by six Oi shareholders, to Portugal Telecom stakeholder Ongoing, Valor reported.

The media offices of Oi and CVM did not immediately respond to emails seeking comments.

Portugal Telecom in 2014 invested nearly 900 million euros in commercial paper issued by bankrupt Rioforte Investimentos holding company of the Espirito Santo family, a key shareholder. Rioforte defaulted on the loans, leading to a revision of the merger terms between Portugal Telecom and Oi.

Full content: Reuters

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