Venezuela has signed a preliminary agreement to purchase Verizon Communications Inc's stake in the country's largest telecommunications company, the latest move by President Hugo Chavez toward nationalizing strategic sectors of the economy.
Telecommunications Minister Jesse Chacon said late on Monday the government will pay US$572 million for Verizon's 28.5 percent stake in Compania Anonima Nacional Telefonos de Venezuela, or CANTV, which Chavez has accused of spying on him at the bidding of the US.
Calling the agreement "transparent," Chacon said it "begins the process of nationalization of one of the most strategic companies for the country's development."
He spoke to reporters after signing the memorandum of understanding with John Diercksen, New York-based Verizon's executive vice president for strategy, development and planning.
The offer amounts to US$17.85 per CANTV American Depository Receipt (ADR) traded on the New York Stock Exchange. CANTV's ADRs closed up 1 percent earlier Monday at US$16.08.
Chacon said the price was "worked on and discussed with the company."
Diercksen said Verizon was pleased to have completed the negotiation quickly and to have given shareholders the opportunity to sell their interests in CANTV.
While the sale price is below the US$676 million that Mexican billionaire Carlos Slim offered for Verizon's stake last year, analysts said the deal still could turn out to be a reasonable one for the US company.
Officials did not say whether Verizon will receive its yearly dividend payment from CANTV as part of the deal -- a condition that was included in a separate buyout agreement last week between the government and US-based AES Corp for Venezuela's leading electricity company.
If so, that could bring the final sale price close to what the market had been expecting, said Luis Gustavo Richard, a financial analyst with local brokerage InterAcciones Casa de Bolsa CA.
Noting that the negotiation was completed just over more a month after Chavez announced the nationalization, Richard said the deal "had to be pretty good for Verizon, otherwise it could have dragged its feet a little more."
"Verizon obtained sufficient benefits during its operation of the company. Nobody is coming out of this losing," he added.
The deal leaves the government with 35 percent control of CANTV, including the 6.5 percent stake it already owned. Remaining shareholders in the company include Spain's Telefonica, public stockholders and employees and retirees.
That gives Chavez operative control of a company that he accused last month of spying on him.
At a summit of South American leaders on Jan. 19, he said CANTV was controlled by "North American capital" and accused the company of recording his conversations at the bidding of the "empire" -- a term he uses frequently to refer to Washington.
CANTV denied the accusation.
The deal with Verizon is the second in a series of takeovers announced by Chavez's leftist government in the electricity, telecommunications, natural gas and oil sectors in his bid to transform Venezuela into a socialist state.
The nationalizations have sparked fears that Chavez could mimic expropriations carried out by his mentor President Fidel Castro during Cuba's communist revolution.
But some investors were encouraged that Chavez's administration plans to fairly compensate companies it takes over, after the government signed a US$739 million agreement last week to buy out Electricidad de Caracas from Arlington, Virginia-based AES Corp.
‘UNACCEPTABLE’: The foreign ministry said that China’s behavior broke international law, while Johnny Chiang was worried such balloons could be used against Taiwan A suspected Chinese surveillance balloon flying over the US was yesterday condemned by officials in Taipei and sparked calls for the government to plan countermeasures. The Pentagon on Thursday said it had detected a Chinese surveillance balloon flying over the country. Beijing has said the balloon is a civilian meteorological device that drifted into US territory after being blown off course. The National Security Bureau and Ministry of National Defense should investigate whether surveillance balloons could be used against Taiwan and prepare to respond to such acts, Chinese Nationalist Party (KMT) Legislator Johnny Chiang (江啟臣) said. US Secretary of State Antony Blinken’s postponement
INTELLIGENCE VALUE: While the US was working on recovering the balloon’s remains, China said that it reserved ‘the right to make ... necessary responses’ US President Joe Biden’s administration lauded the Pentagon for shooting down an alleged Chinese spy balloon off the US Atlantic coast on Saturday, but China angrily voiced its “strong dissatisfaction” at the move, and said it might make “necessary responses.” The craft spent several days flying over North America before it was targeted off the coast of the southeastern state of South Carolina with a missile fired from an F-22 plane, Pentagon officials said. It fell into relatively shallow water just 14m deep. US Secretary of Defense Lloyd Austin called the operation a “deliberate and lawful action” that came in response to China’s
RISK FACTOR: ASEAN issued a statement saying the cross-strait situation ‘could lead to miscalculation,’ but it is willing to facilitate dialogue to ensure stability in the region The Ministry of Foreign Affairs yesterday welcomed a joint statement by ASEAN leaders voicing concerns that the situation across the Taiwan Strait could affect regional stability. The statement was issued after the ASEAN Foreign Ministers’ Retreat ended on Saturday in Jakarta. It was the first major meeting since Indonesia assumed chairmanship of ASEAN this year. Attendees of the meeting reiterated their determination to promote “sustainable peace, security, stability, and prosperity within and beyond the region,” the statement said. They expressed concerns about developments across the Taiwan Strait and their “implications on regional stability,” the statement said. The cross-strait situation “could lead to miscalculation, serious
THINK TANK VISIT: The former US Indo-Pacific official said that a capture of Taiwan’s outlying islands by China rather than a large-scale attack is a grave security concern The US and Taiwan can deepen their relations on many fronts, former head of the US Indo-Pacific Command Philip Davidson said yesterday while visiting President Tsai Ing-wen (蔡英文) at the Presidential Office. Davidson is leading a six-member delegation from the National Bureau of Asian Research, a US-based think tank. They arrived on Monday and are scheduled to depart tomorrow. Tsai met with the delegation yesterday morning, welcoming the organization on its first visit to Taiwan since the start of the COVID-19 pandemic, the office said in a statement. She thanked Davidson, a retired admiral, for paying close attention to matters regarding the Taiwan