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M&A
Sale of Embratel to Telmex unlikely, analysts believe
sábado, 28 de junho de 2003 , 13h29 | POR REDAÇÃO

Reports that Carlos Slim (Telmex, Telecom Americas) is interested in buying Embratel ?is a unilateral desire without any corresponding interest on the part of MCI?, a Mexican equity analyst who specializes in telecoms told TELETIME News Wednesday, June 25. According to the analyst, who works for a Spanish-owned bank, Mr Slim is ?trying by every possible means? to leverage the cut-rate debt exceeding 300 million US Dollars he purchased from creditors of WorldCom, now MCI (Embratel?s parent company).
As reported by TELETIME News in early April, the Mexican equity market is clearly hostile to the possibility of Embratel?s acquisition by Telmex. Investors believe acquisition of Embratel would be bad for the performance of Telmex stock.

Bovespa rally

Brazilian investors, on the contrary, have been buying Embratel strongly in response to an article published by Mexico?s El Economista that claimed Telmex could acquire the Brazilian long-distance carrier. Embratel voting stock (ON) had gained 16.32% at one point during a bearish day on the São Paulo Stock Exchange (Bovespa). The stock closed up 10.03% on 6.47 Brazilian Reals, while the overall market lost 0.63%.
The article in El Economista, signed by Jaime Hernandez, cites analysts with financial group Mexico Ixe who say the acquisition depends only on price. It adds that Jaime Chico Prado, managing director of Telmex, is evaluating possible acquisitions in Latin America but doesn?t name any names.
However, some Brazilian analysts believe the market has ?drawn exaggerated conclusions? from the newspaper story. In brief, they point out that: 1) the newspaper repeated old news from the Wall Street Journal in April when it said Telmex was looking at possible acquisitions in Latin America, with Embratel as a potential target ?depending on market price?; 2) even the Mexican reporter stressed that Telmex hadn?t confirmed the story and confined itself to general indications of interest in the same Latin American assets mentioned by the WSJ, including Venezuela?s CanTV and Argentina?s Teo.

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