Telefonica Says Portugal's Veto On Vivo Stake Sale Is Illegal

Spanish telecommunications giant Telefonica SA (TEF) said Wednesday that the Portuguese government's veto of its EUR7.15 billion bid to buy out Portugal Telecom SGPS S/A (PT) from the two companies' Brazilian joint venture lacks legal grounds.

Telefonica said in a press release that the decision by the Portuguese government and the use of its so-called golden share in PT was illegal and in violation of regulations in Portugal and the European Union.

Telefonica also said it is extending the acceptance period of its bid to July 16.

Portuguese Prime Minister Jose Socrates defended his decision to use Portugal's golden share to veto the deal, saying the country has a strategic interest in maintaining the size of its largest company by market value.

About 74% of PT shareholders voted in favor of the Spanish company's offer at PT's extraordinary general meeting.

Company websites:

http://www.telecom.pt

http://www.telefonica.com

-By Santiago Perez, Dow Jones Newswires; +34 618 528 681; santiago.perez@dowjones.com

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