By Carla Mozee
Brazilian stocks rose Wednesday, buoyed in part by an advance
among communications stocks as Spain's Telefonica SA ramped up its
pursuit of Brazilian wireless giant Vivo Participacoes SA.
The advance in Brazil's Bovespa equity index was in line with
gains among its regional peers and coincided with a strong advance
on Wall Street. U.S. shares got a lift from news that pending U.S.
home sales rose 6% in April as buyers rushed to beat the expiration
of tax subsidy.
The Bovespa rose 1.4% to 62,686, nearly wiping out the bulk of
its 1.9% loss on Tuesday.
The broad-based advance in Wednesday's session was led by
finance, communications and transportation stocks. Shares of air
carriers Gol (GOL) rose 2.6% and Tam (TAM) jumped 4.2%.
The communications group rose 2.4%, with overall advancers on
the Bovespa led by a 7.8% surge in shares of telecom company Oi
(TNE).
"We believe that [TIM Participacoes] or even Oi could be
potential assets for Portugal Telecom," wrote Bradesco analyst Luis
Azevedo in a note to clients in the wake of Telefonica's raised bid
for Portugal Telecom's stake in Vivo Participacoes (VIV).
Portugal Telecom (PT) is unlikely to leave Brazil, said Azevado,
but Telefonica's new offer may encourage the company to look for
another Brazilian asset in which to invest.
"The big question would be negotiating with Telecom Italia or
even Oi's controlling shareholders (which includes the Brazilian
government)," he wrote.
Telefonica's new bid for Portugal Telecom's stake in Vivo now
stands at 6.5 billion euros ($8 billion), up from a bid of 5.7
billion euros which was rejected in May. Telefonica and Portugal
Telecom are joint-venture partners in Vivo.
Shares of Vivo Participacoes (VIV) lost grip of earlier gains to
slip 0.1%.
Mobile services provider TIM (TSU) is the Brazilian unit of
Telecom Italia (TI). Its shares advanced 1.9%.
Elsewhere on the deal front, shares of Gerdau (GGB) rose 2.8%
after the steel maker proposed a $1.6 billion buyout of the shares
it doesn't already own in its U.S. unit, Gerdau Ameristeel.
"We believe this move indicates management's confidence on the
recovery of the U.S. operations, which most investors might not be
fully pricing in," said Credit Suisse analyst Ivan Fadel in a note
to clients.
As Ameristeel becomes a wholly-owned subsidiary, "Gerdau should
benefit from a more simplified corporate structure; synergies as
well as a more efficient decision-making process," he wrote.
Elsewhere, Mexico's IPC index rose 0.1%. Argentina's Merval
gained 0.9% and Chile's IPSA rose 0.8%.