I am glad and grateful that Exame Expresso and Jornal de Negócios yesterday followed up on the issue of TAP’s valuation in Gérman Efromvich's offer. They did the public interest a huge service. Mr. Efromvich’s bid was greedy, but he is pragmatic. He knows that if there is a second competitive sale process he is very unlikely to win the prize (TAP) even if he bids €2bn-€3bn and he would have to wait perhaps a year.
He now faces a dilemma:
· He may well try to “get the deal clinched” and “everybody happy” by offering anywhere from €500mn to €1bn (rather than €20mn). But he knows this will leave the sell side feeling like fools;
· He may lobby in the expectation that the government powers ahead with the current offer – a real possibility with this government - , but this likely is, from his perspective, too risky a gamble;
· He could, of course, walk away, … but ...
· He could also bid €2bn-€3bn and argue that the government would not get more if it decides to reopen the sale process.
So, how will this saga play out?
For the record, in my view, given the role of TAP to Portugal’s export sector, the government shouldn’t sell TAP at this point.