Portugal: Cofina informs securities regulator of giving up Media Capital acquisition

Cofina, the Portuguese company that owns tabloid newspaper Correio da Manhã and other publications, confirmed on Friday in a statement to the securities markets regulator, the CMVM, that it is dropping its bid for Media Capital, a Portuguese subsidiary of Spain’s Prisa that owns television broadcaster TVI, among other media.

“Following the communication of March 13 … regarding the acquisition of the stake held by Promotora de Informaciones, S.A. (“Prisa”) in Grupo Média Capital, SGPS, S.A. (“Media Capital”), Cofina, SGPS, S.A. (“Cofina”) informs that, in the absence of any agreement regarding the modification of the purchase and sale agreement of shares representing 100% of the share capital and voting rights of Vertix, SGPS, S.A. (“Vertix”), entered into on September 20, 2019, as amended (the “Agreement”) in order to restore a balance of reciprocal benefits in accordance with the principles of good faith, the notice of termination of the Agreement has taken effect,” the statement reads.

In the same notice, Cofina stresses that the decision arose from “an unexpected and very significant deterioration in the financial situation and prospects of Vertix and Media Capital, especially aggravated by the present context of emergency caused by the Covid-19 pandemic, and the behavior of Prisa, which has incurred serious contractual violations and, finally, expressly stated its intention of not complying with the Contract, which has irreparably affected the relationship of trust between the parties.”

It adds that “Cofina also transmitted to Prisa the understanding that, even if the declaration of resolution should in future be understood as ineffective, the implementation of the acquisition provided for in the Contract would always depend on the final determination of the amount of compensation due to Cofina for such breaches of contract, which, in general terms, should be deducted from the price foreseen in the contract.”

On Monday, Prisa had reiterated its view that Cofina had violated the agreement on the acquisition of Media Capital and said it had begun to take “all measures” in defence of its interests.

Last Friday, Cofina rejected the suggestion that it owed Prisa €10 million for dropping the bid.

It was on 11 March that Cofina had announced that it was giving up on its plan to buy the company that owns TVI, having failed to complete a planned €85 million capital increase, approved by its shareholders on 29 January, that was to have raised the funds to pay for the acquisition.

Portugal’s Expresso newspaper had on 11 March reported that that decision would cost the company €10 million in funds put forward as collateral.

Nevertheless, Cofina in a statement released on 13 March said that it might return to the negotiating table, having sent Prisa “on March 12 … notice of termination of the contract (on the basis of grounds that will be publicly disclosed in due course), conditional on Cofina and Prisa not agreeing within seven days to modify the contract so as to re-establish a balance of reciprocal services in accordance with the principles of good faith.”