Mergers & Acquisitions In Portugal 2002
By Vasco Marques Correia & Anabela GonÁalves Ferreira
I. Introduction - An Overview of the Current Economic Situation
By 1995, the M&A activity in Portugal had experienced significant growth along with the general trends of the markets, then also stimulated by the privatisation of companies in important sectors such as banking, telecommunications, electricity, transport, insurance, brewery, cement and manufacturing.
Following that intense period, the situation of the economy worldwide impacted in a significant adverse manner in the Portuguese economy.
This factor produced a very clear fall in the M&A market and whilst mergers continued, at a slow rate and in most cases in respect of medium size inter-group operations, acquisitions have been greatly affected.
The years 2000 and 2001 were marked by moderation in growth, inflation and unemployment rates.
The expected recovery of the economy of the US, usually followed by that of Europe, will certainly extend its positive effects to Portugal, where the new Government elected in mid March is already working on and implementing measures to reform the tax system, to modernize the industry and to increase the country's competitiveness in the integrated and globalised world markets.
The Government has already announced a programme for the productivity and growth in Portuguese economy in order to reinforce the competitiveness of companies and to dynamize the economy.
Such programme to be executed until the end of 2002 includes (i) tax relieves (possibility of the companies to create in 2003 tax reserves up to 20% of their tax assessment in Corporate Tax which must be used in new investments in the two subsequent years), (ii) launching of new privatisation processes of public companies such as Portucel, Galp, EDP, EPAL, ANA, TAP and (iii) removal of bureaucracy as to legal requirements and procedures applicable to investment in Portugal, to set up companies and branches, to obtain industrial licences, to merge and demerge and to acquire companies.
The performance of the Portuguese M&A market may now be positively perspectivated, in particular in the last quarter of the year 2002.
II. Legal Regime
2.1. Governmental Control of Foreign Investments
In general, foreign investments in Portugal are solely subject to an information requirement in a form of notice to ICEP (the Portuguese Investment, Trade and Tourism Board) within 30 days after acquisition, for...