The Mergers & Acquisitions Review: Portugal

Overview of M&A activity

As a result of the covid-19 pandemic, in 2020, Portugal's economy suffered its greatest contraction since 1995, with GDP decreasing 8.4 per cent (which contrasted with the 2.7 per cent GDP increase in 2019).2

This notwithstanding, the Portuguese economy seems to be on track for recovery and the projections for 2021 are optimistic, including an estimated increase in GDP of 4.8 per cent.3

The numbers for the second quarter of 2021 confirmed these positive signs, with GDP increasing 4.9 per cent in volume compared to the first quarter of the year.4

The economic contraction in 2020 was reflected in a 22 per cent decrease in Portuguese M&A activity, although the total aggregate value of deals (considering only transactions with disclosed value) increased 5.3 per cent, almost reaching €18 billion.5

As far as transactional activity is concerned, the first wave of the pandemic has put several transactions on hold (some of which have already resumed) and has also caused the cancellation of some of them.

However, in the last 12 months some very relevant transactions took place in different activity sectors.

On the one hand, the levels of activity registered from mid-2020 until the present date show a strong resilience and capacity to adapt to the new circumstances by the market and on the other hand, some deals somehow already reflect the distress caused by the pandemic (in particular, in the hospitality and aviation sector) or, from the opposite perspective, some of the more promising areas in the future (which range from e-commerce to logistics).

International investment and private equity funds have been particularly active in the Portuguese market, and even though their interest in Portugal originated in the 2010/2011 crisis, the truth is that they have maintained a very relevant role in the dynamic of the Portuguese economy, presenting bids in most of the relevant deals in the tourism, real estate, insurance and banking sectors, even during the peak of the covid-19 pandemic.

The real estate sector continues to be the most active sector in the Portuguese M&A market, with relevant deals in all segments. In fact, real estate continued to be the sector with more M&A deals in 2020.6

General introduction to the legal framework for M&A

The Portuguese legal framework governing M&A comprises, in particular, the following laws:

  1. the Civil Code, enacted by Decree-Law No. 47344, of 25 November, as amended, which contains the general rules governing sales, purchases and contracts;
  2. the Commercial Companies Code, enacted by Decree-Law No. 262/86, of 2 September, as amended (PCCC), which includes the general framework governing Portuguese companies (the most common are limited liability companies by shares, which may be listed or non-listed companies, and limited liability companies by quotas, both of which are limited liability companies) and also the legal regime governing share capital increases and decreases, mergers and demergers, transfers of shares in limited liability companies by quotas and financial assistance;
  3. the Securities Code, enacted by Decree-Law No. 486/99, of 13 November, as amended, which is applicable to listed companies7 but also contains the general regime regarding some matters, such as the transfer of shares in limited liability companies by shares;
  4. the Competition Act, enacted by Law No. 19/2012, of 8 May, as amended;
  5. the Labour Code, enacted by Law No. 7/2009, of 12 February, as amended; and
  6. the private equity legal regime, enacted by Law No. 18/2015, of 4 March, as amended.

In addition, regulated sectors such as banking, financing and insurance are governed by specific laws and regulations, some of which are issued by the respective regulatory entities.8

Moreover, privatisations are specifically governed by laws enacted by the government containing the applicable regime for each privatisation.

Developments in corporate and takeover law and their impact

i Financial sector: structural reforms

In line with the goals established in the memorandum of understanding entered into in 2011 with the European Commission, the International Monetary Fund and the European Central Bank, in the context of Portugal's bailout, the Portuguese government has implemented profound changes in the legal framework governing the financial sector, and most of said goals, even if to a variable extent, have been accomplished.

Decree-Law No. 298/92, of 31 December, which governs credit institutions and financial entities, has been the object of an in-depth reform in the past few years, and enacted by several laws and decree-laws, in particular:

  1. Law No. 23-A/2015, of 26 March, which transposes Directives 2014/49/EU, of 16 April 2014, and 2014/59/EU, of 15May 2014. Inter alia, the Law:
    • increased the powers of the Bank of Portugal regarding recovery measures;
    • amended the rules applicable to deposit guarantee schemes;
    • increased the number of possible resolution measures that may be determined by the Bank of Portugal, allowing, in particular, the segregation of assets to an asset management vehicle;
    • allowed the Bank of Portugal to determine internal recapitalisation measures (bail in);
    • established specific rules regarding financial support between companies pertaining to the same group; and
    • imposed an evaluation of the assets and liabilities of the entities subject to resolution measures before the same are implemented.
  2. Decree-Law No. 20/2016, of 20 April, which sets forth that shareholders' general meetings of credit institutions whose articles of association establish voting caps must take place every five years to resolve on the maintenance or revocation of said voting caps (otherwise, said voting caps will be considered forfeited); and
  3. Law No. 16/2017, of 3 May, which requires banks to disclose the identification of the shareholders with qualified shareholdings within the banks, as well as the beneficial owner of those same shareholdings.

ii Corporate laws

In 2017, there were two relevant amendments to the PCCC.

Bearer securities

Aiming at preventing corruption, money laundering and tax fraud, and increasing transparency in the capital markets, Law No. 15/2017, of 3 May prohibits the issue of bearer securities, and created a transitional six-month period (until 4 November 2017) to convert existing bearer securities into registered securities. This Law came into force on 4 May 2017.

As a consequence, all securities issued by Portuguese entities, including shares, must be registered securities, meaning that issuers must be able to identify their holders at any time.

Pursuant to this Law, bearer securities that were not converted into registered securities within the aforementioned six-month period cannot be validly transferred, and their holders' right to participate in the distribution of results is suspended until such conversion is completed.

Conversion of shareholder loans into share capital

Pursuant to Decree-Law No. 79/2017, of 30 June, shareholders of limited liability companies by quotas that gather the necessary votes to approve the amendment of a company's articles of association may approve a share capital increase by conversion of shareholders' loans granted by them to the company by means of a simple communication to the company's directors.

After receiving said communication, the directors must inform the remaining shareholders, who have 10 days to oppose the share capital increase, which only becomes effective if none of the latter opposes the conversion.


In addition, among the extensive legislation enacted within the context of the covid-19 pandemic, there were some relevant changes introduced from a corporate standpoint, in particular the following.

Electronic meetings

The corporate bodies (in particular, but without limitation, shareholders' general meetings and boards of directors) of companies and other entities (such as associations) have been allowed to meet by means of electronic meetings (e.g., meetings by means of audio or video conference), even if the articles of association do not expressly authorise them, aimed at simultaneously allowing the members of corporate bodies to participate in corporate matters (thus guaranteeing a normal day-to-day working life for companies) and comply with the government's sanitary rules and recommendations that impact gatherings and events.

Restrictions to distributions to shareholders

The companies benefiting from the simplified lay-off procedure or from the gradual activity recovery procedure (which provide financial assistance to entities that have suffered a material impact caused by the pandemic and are aimed at securing jobs) may not distribute dividends, at any title whatsoever, while the obligations resulting from these procedures are in force.

Failing to comply with the above entails the immediate termination of incentives and the refund or payment of the amounts received or exempted.

In addition, entities benefiting from the debt legal moratorium cannot distribute dividends, at any title whatsoever, reimburse credits to their shareholders or acquire treasury shares while the moratorium is in force.

Failing to comply with this entails the automatic termination of the moratorium.

Foreign involvement in M&A transactions

i M&A transactions9 headed by strategic foreign investors

Activity in the Portuguese M&A market in the past has been to a large extent because of the role of foreign investors, who have played a key role in the revitalisation of the Portuguese economy.

This phenomenon is related not only to the pressure of Portuguese companies and the state to divest, which has created excellent opportunities for investors, but also to the fact that Portugal is regarded as a strategic hub between Europe and countries such as Angola, Brazil, Mozambique and other former Portuguese colonies.

Moreover, Portugal continues to be very open to foreign investment and has a flexible foreign direct investment regime when compared to other European countries (many of which have recently enacted stricter direct investment regimes aimed at preventing opportunistic foreign investment in strategic sectors during the crisis caused by the covid-19 pandemic).

Chinese investment has played a particularly relevant role in this, beginning with the acquisition, in 2011, by China Three Gorges Corporation from the state of a 21.35 per cent shareholding in EDP, the biggest electricity producer, distributor and trader in Portugal, for €2.7 billion, followed by the acquisition in 2012, by State Grid Corporation of China, of a 25 per cent shareholding in REN, the largest Portuguese energy grid company, for approximately €387 million. At the beginning of 2014, Fosun International acquired from the state 80 per cent of Caixa Seguros, the largest Portuguese insurance group, including the companies Fidelidade and Multicare, for €1 billion, and in October 2014 Fidelidade acquired 96 per cent of Espírito Santo Saúde, one of the biggest health groups in Portugal, after this company's successful initial public offering at the beginning of 2014 for more than €455 million.

The following are some of the most relevant deals featuring Chinese investors in the past years:

  1. in November 2016, Fosun acquired 16.7 per cent in Millennium BCP in a share capital increase reserved to it and increased that stake to 24 per cent in a new share capital increase that took place in February 2017 for a global investment of €549 million;
  2. in June 2017, a subsidiary of China Three Gorges Group (ACE Portugal Sàrl) acquired 49 per cent of EDPR PT – Parques Eólicos, a 422MW wind farm, for €248 million;
  3. in June 2017, EDP sold 49 per cent of EDPR PT – Parques Eólicos to a subsidiary of China Three Gorges Group for €242 million;
  4. in May 2018, China Three Gorges launched a takeover offer over EDP and EDP Renováveis, subject, in particular, to the withdrawal of the voting cap in EDP's articles of association by EDP's shareholders' general meeting. Since the withdrawal was not approved, in May 2019 the CMVM put an end to the takeover offer based on non-compliance with the conditions established by China Three Gorges;
  5. in November 2018, the Macao businessman Kevin Ho, through KNJ Investment, acquired a 30 per cent stake in Global Media Group for €15 million; and
  6. in July 2018, Bison Capital Financial Holdings completed the acquisition of Banif Banco Investimento from Oitante.

European investors (in particular, Spanish, French, English and German) have been more active in recent years. Examples include the acquisition of SAPEC Agro Business (engaged in crop production products and crop nutrition, with sales in over 70 countries) by Bridgepoint, completed in January 2017, for €456 million (then sold to Partners Group for €1.1 billion in July 2020); the takeover launched by Caixabank on Banco BPI, which was successfully completed and entailed an investment of €645 million; and the acquisition of the remaining 50 per cent stake in Ascendi by Ardian for €600 million in 2017. In July 2018, Blackstone sold Fórum Almada to Merlin Properties for €406.7 million. In 2019 EDP – Energias de Portugal agreed to sell a portfolio of hydro power plants located in the North of Portugal (representing a total of 1,689MW of hydroelectric power) to the French consortium formed by Engie, Mirova and Predica for €2.2 billion. In 2020, CF Infrastructure and Power Assets Holdings agreed to sell Iberwind to Ventient; José de Mello Group and Arcus have sold an 81.1 per cent stake in Brisa to the consortium formed by APG, NPS and Swiss Life; Galp agreed to sell to Allianz a 75.01 per cent stake in Galp Gás Natural Distribuição (GGND) for €368 million and Ardian acquired Frulact from its shareholders for an undisclosed amount.

In 2021, relevant transactions took place, including the acquisition of a 24.99 per cent stake in Continente by CVC from Sonae MC for €528 million.

In line with this trend, of the 128 inbound acquisitions completed in the past year, 115 were carried out by European investors, with Spain, France and the United Kingdom sitting in first, second and third places, respectively.10

US funds have also been very active in the Portuguese market, and have participated in most of the bids for relevant transactions in the past few years. In particular, OutSystems, a Portuguese company engaged in the production and development of software, which holds subsidiaries in Brazil, Dubai, the Netherlands and the United States, has been raising funds from US funds in the last years, including North Bridge in January 2016 (€50 million), KKR and Goldman Sachs in June 2018 (€309 million) and Abdiel Capital and Tiger Global Investments in February 2021 (€150 million). Feedzai has been undergoing a similar process, with several US funds participating in its investment rounds, including KKR and Sapphire Ventures in March 2021 (€169 million). In March 2016, the Carlyle Group acquired 50 per cent of Logoplaste (an industrial group engaged in the manufacturing of rigid plastic packaging) for €570 million and in February 2021 agreed to sell its stake to Ontario Teachers' Pension Plan. In December 2018, the Carlyle Group and Explorer Investments acquired Penha Longa Hotel and Golf Resort for €100 million and in February 2019, Oaktree acquired a stake in Belas Clube de Campo, with a global estimated investment of €500 million. In the third quarter of 2018, Morgan Stanley Infrastructure Partners and Horizon Equity Partners acquired a 75 per cent stake in Towers of Portugal from Altice for €495 million and in 2020, Altice sold a minority stake of 49.99 per cent in Altice Portugal FTTH to Morgan Stanley Infrastructure Partners for €1.5 billion.

ii M&A transactions headed by national investors in key destinations

In 2020, 52 per cent of the outbound registered deals completed in the past year were carried out in European companies, with Spain clearly leading the rankings (with approximately 32 per cent of the deals), then followed by Brazil and the United States (with 12 and 10 per cent of the outbound deals, respectively).11

Significant transactions, key trends and hot industries

In addition to the transactions listed in the preceding section, the following are some other important M&A deals that have taken place in the past few years.

i M&A transactions related to financial and insurance institutions

In the context of the requirements both at a local and at a European Union (EU) level regarding ring-fencing and the separation of banks' deposit-taking functions from more risky businesses, several banking and insurance groups have been selling non-core businesses. The increasingly strict regulatory requirements in both the banking and insurance sectors have also led to strategic divestments by several players.

The following are examples of deals in these sectors:

  1. in April 2016, Bankinter (a Spanish bank) acquired the retail and insurance business of Barclays Portugal for approximately €160 million;
  2. in December 2016, Real Vida Seguros (pertaining to the Portuguese Patris group) acquired both a controlling stake in Banif Pensões from Oitante and 100 per cent of Finibanco Vida from Montepio Geral;
  3. in February 2017, the Chinese conglomerate Fosun completed the acquisition of a 24 per cent stake in Millennium BCP for a global investment of €549 million (see above);
  4. also in February 2017, Caixabank successfully completed its takeover of Banco BPI, raising its stake from 45 to 84.5 per cent, for €645 million;
  5. in October 2017, Lone Star completed the acquisition of 75 per cent of Novo Banco, a bank that resulted from the transfer of part of Banco Espírito Santo's businesses after its collapse in August 2014, for a global investment of €1 billion. Portugal's bank resolution fund retained the remaining 25 per cent of Novo Banco;
  6. in May 2018, Santander Totta (a Spanish bank) acquired Banco Popular Portugal for €1;
  7. in June 2019, Deutsche Bank completed the sale of the retail, private and commercial client business of its Portuguese branch to the Spanish bank Abanca;
  8. in July 2019, Generalli acquired the insurance group Tranquilidade from Apollo for €600 million;
  9. in October 2019, Novo Banco completed the sale of the insurance company GNB Vida to Bankers Insurance Holdings, a company held by Apax Partners (Global), for €168 million; and
  10. in October 2020, Novo Banco, together with its subsidiaries Banco Best and GNB Gestão de Ativos, signed an agreement for the sale of its 25 per cent stake in GNB – Companhia de Seguros, a non-life insurance company, to Crédit Agricole Assurances, for €15.9 million.

ii Energy sector

The energy sector has also been particularly active in the past few years.

As far as renewable energy is concerned, the past couple of years have seen some of the biggest wind asset portfolios being sold, including the sale of Iberwind to Chinese group Cheung Kong for €1 billion, the sale of Finerge to First State for €900 million and the sale of a stake in EDF Energies Nouvelles' wind business in Portugal to Lancashire County Pension Fund, all in 2015. In June 2018, New Finerge, the company that acquired the Finerge wind farm business in 2015, acquired five companies engaged in the wind sector. Finerge itself has been particularly active in growing through acquisitions: in 2021 it has acquired WTG Energias from WTG Corporation and has announced the acquisition of a wind portfolio from EDF and of a wind plant in Alcácer do Sal from Tecneira; in 2020 and 2019, Finerge completed a total of four deals in Portugal, including the acquisition of two wind asset portfolios from Martifer and SPEE. In March 2019, Total Eren acquired from Novenergia Fund the company Novenergia Holding Company, which owns, in particular, Generg, one of the biggest renewable energy players in Portugal that also has activities in six other European countries. Some relevant deals occurred in 2020, such as the sale of Iberwind to Ventient and the sale of EDP's portfolio of hydroelectric power plants from to Engie, Mirova and Predica (see above).

In July 2021, EDP Renováveis agreed to sell a 221MW wind portfolio to Onex Renewables for €532 million and Pontegadea acquired a 12 per cent stake in the capital of REN from Oman's Oil Company for €190 million.

Also in 2021, a new player assumed a major role in the Portuguese energy market after a successful IPO: Greenvolt, which was incorporated in 2020 by the Altri group and focuses on biomass, solar and wind energy.

Several deals also took place in the gas sector. In October 2016, Marubeni and Toho Gas acquired from Galp Gás a 22.5 per cent stake in its natural gas distribution business (GGND) for €138 million. In March 2017, Artá completed the acquisition of Gascan from Portuguese private equity Explorer for €70 million. In February 2019, Gascan was then sold by Artá to UBS Asset Management for €100 million. In October 2017, REN completed the acquisition of EDP Gás from EDP for €532 million. In 2020, Galp agreed to sell to Allianz a 75.01 per cent stake in GGND (see above).

The sale of Partex Oil and Gas by Fundação Gulbenkian to Thai company PTTEP for €555 million was completed in November 2019.

iii Real estate and construction sectors

The real estate sector has contributed very significantly to activity levels in Portuguese M&A in recent years and 2020 was no exception to this trend, as it registered high levels of activity in its different segments, despite a significant slowdown during the first wave of covid-19.

Since 2017, the sale of shopping centres has been particularly prevalent. For instance:

  1. in 2017, Fórum Coimbra and Fórum Viseu were sold by Locaviseu to Greenbay and Resilient for a global amount of €220 million;
  2. in January 2018, Dolce Vita Tejo (the second-biggest shopping centre in Portugal) was sold by Baupost and Eurofund to AXA Investment Managers for €230 million;
  3. also in January 2018, Sintra Retail Park, Fórum Sintra and Fórum Montijo, valued at €400 million, were sold by Blackstone to Auchan;
  4. in July 2018, Blackstone sold Fórum Almada to Merlin Properties for €406.7 million;
  5. in April 2019, Leiria Shopping was sold by Sonae Sierra Fund to DWS Grundbesitz for €128 million;
  6. in February 2020, Sonae Sierra, APG, Allianz and Eloa announced a strategic joint venture in six shopping centres in Iberia with a gross asset value over €3 billion;
  7. in November 2020, APG acquired the remaining 50 per cent stake in Via Outlets, which owns, among others, the Alcochete and Vila do Conde outlet centres, from Hammerson, for €307 million; and
  8. more recently, in August 2021, Finangeste acquired Dolce Vita Miraflores from Abanca for €4.1 million, in the context of an insolvency procedure.

The hospitality and residential sectors have also thrived and have been particularly active in the covid-19 recovery period:12

  1. the acquisitions of the Penha Longa Hotel and Golf Resort by a joint venture formed by the Carlyle Group and Explorer Investments and the acquisition by Oaktree of a stake in Belas Clube de Campo (see above);
  2. in February 2020, Palminvest acquired Bernardino Gomes real estate portfolio, including the hospitality chain Hotéis Real, for €300 million;
  3. in July 2021, the fund CA Património Crescente, from Crédito Agrícola group, acquired from Sonae Capital Porto Palácio Hotel, formerly Sheraton, for €62.5 million; and
  4. also in July 2021, Azora acquired two hotels in the Algarve, Tivoli Marina Vilamoura and Tivoli Carvoeiro, from Minor for €148 million;
  5. in August 2020, Azora acquired Vilalara Thalassa Resort from Oxy.

In addition, Teixeira Duarte, one of the biggest Portuguese construction companies, put in place a divestment plan, in the context of which it sold Lagoas Park, SA in June 2018, the company that owns a business park near Lisbon, to the private equity fund Kildare for €375 million, and in August 2018, its 7.5 per cent stake in Lusoponte to Vinci and Mota-Engil for €23.3 million. More recently, in September 2020, Lagoas Park, SA was sold again, this time to the UK investment fund Henderson Park Capital Partners. In July 2021, Vinci and Mota-Engil acquired Atlantia's stake in Lusoponte, after exercising their pre-emption right in this sale.

Financing of M&A: main sources and developments

As a result of the financial crisis, and of the considerable decline of leveraged loan transactions and longer-term financings by bank syndicates, Portuguese companies have resorted to alternative sources of financing to support both their M&A investments and their current businesses. In particular, the issuance of corporate bonds (including high-yield bonds), as well as factoring and financial leases, have become more and more common.

Bank restructurings in Portugal have also opened a window of opportunity for an influx of alternative financing to traditional banking, notably through hedge funds, private equity and capital venture operations.

In particular, private equity funds, both local players and some of the major international private equity funds, have been quite active in Portugal and are expected to have an important role in the period ahead, as the economic impact of the pandemic will likely result in interesting investment opportunities.

Additionally, a shift from Portuguese-style (short-form) documentation to Loan Market Association-based documentation governed by Portuguese law is now a consolidated trend noted in the banking sector, triggered by the risk aversion of Portuguese banks.

In recent years, and in line with the revitalisation of the Portuguese market, banks are more willing to finance companies, both local and foreign investors (even though most foreign players obtain financing abroad). This contrasts with the situation seen before, where companies felt the need to go to foreign markets to obtain financing.

Employment law

In the past 12 months, as a result of the outbreak of the covid-19 pandemic, several laws were passed with a view to helping companies maintain their level of employment and avoid making employees redundant. Among these measures, the simplified lay-off procedure and the extraordinary incentive for the maintenance of the positions are the most relevant ones.

Considering that the Social Security and the Employment and Professional Training Institute are granting financial assistance through the payment of public funds to companies that resort to these measures, the latter are unable to dismiss employees for economic reasons during the execution of the public programme and within the 60 days (or 90 days, for incentives requested as of 1 October 2021) after the programmes have ended. Accordingly, M&A deals now need to take this into consideration, because many companies benefited from these programmes and, therefore, are unable to implement redundancy procedures for a given period of time, as well as to distribute profits while these measures are in force.

Other than the above, we would only note that the Portuguese market and legal community are still adjusting to the substantial amendments, approved by Law No. 14/2018, of 19 March, on the Portuguese Labour Code, which considerably changed the employment-related rules governing transfers of undertakings or parts of undertakings. In this regard, a special mention should be made about the now-express acknowledgement of employees' right to oppose the transfer of their employment agreements upon a transfer of an undertaking or establishment.

In fact, the recent changes to the regime now expressly make it possible for employees who oppose a transfer to stay with their existing employer whenever such a transfer causes them serious damage. However, the amendments do not give a complete definition of what is to be considered serious damage but merely provide some abstract examples, such as where there is an evident lack of solvency or a precarious financial situation of the transferee, or even when, in the employees' view, the transferee's human resources policies do not warrant their trust. Considering the lack of conceptual rigour of these new rules, it will be up to the labour courts to determine how easy or difficult bringing an allegation of serious damage will be. One particular judgment of a Court of Appeal ruled that this right of opposition must be duly grounded and that the burden of proof falls on the employee, who must allege and prove damages or a material possibility of those damages occurring as a result of the transfer of his or her employment agreement.

In the past year, the ultimate consequences of an employee's objection to a transfer have also been called into question, given the unclear wording of the new provisions. In fact, if an employee objects to a transfer and stays with the transferor, the latter could refuse to keep the employee and force him or her to bring a lawsuit to prove the alleged serious damage. If successful, the employee's right to stay with the transferor would be recognised, but it is unclear what would happen if the employee is unsuccessful. Would the employee be deemed to have transferred to the acquirer of the business? Will the illegal enforcement of the opposition right be qualified as a resignation without the right to compensation? The answer to these questions is unclear, and it will be up to the courts to provide additional guidance in this regard.

The opposition right is particularly ill-designed in respect of situations where a transferor ceases to exist (notably, in the case of a merger). The most sensitive solution would be to consider that the right of opposition could only determine that an employee would be entitled to terminate an employment agreement and claim the payment of an indemnity from the transferor (equivalent to the severance compensation paid in the event of redundancy), but until the courts issue rulings with this understanding, the answer will remain unclear.

It is also worth mentioning that the new changes also set forth that an employee who did not oppose the transfer of his or her employment agreement may later on terminate the contract with the acquirer of the business and demand payment of a compensation, if he or she sustains he or she has suffered serious damage as a result of the transfer. However, the deadline for enforcing this right is controversial: for instance, is there a statute of limitations or a deadline to operate the termination? Some scholars maintain that the right to terminate the agreement and claim the payment of severance compensation from the acquirer of the business would only be possible in relation to the transfer of an undertaking as a whole and not a (partial) transfer of a business. Again, this is also debatable and, given how recent these changes are, it is not yet possible to anticipate where the courts will stand in this matter.

These rules concerning a transfer of an undertaking entered into force on 20 March 2018 and apply to all such transfers occurring as of that date.

It should be stressed that these labour rules do not apply to share purchase deals. In fact, this regime merely concerns the transfer by any means (spin-off, merger, assignment, etc.) of an undertaking, an establishment, or part of an undertaking or an establishment constituting an autonomous unit.

In the short term, new legislation on teleworking and remote work is expected to be passed.

Tax law

Since 1 January 2021, the acquisition by a single shareholder of more than 75 per cent of the share capital in a Portuguese company whose assets are directly or indirectly composed of at least 50 per cent by real estate assets located in Portuguese territory and which are not allocated to an agricultural, industrial or commercial activity (excluding acquisition of real estate for resale) are subject to Real Estate Transfer Tax at a rate of 6.5 per cent.

No other significant developments had an impact on M&A activity in the past 12 months.

Competition law

Even though no relevant modifications to the merger control legal framework were registered in the past year (the Portuguese merger control framework was further aligned with the EU merger control framework with the entry into force of the new Competition Act in 2012, which has remained materially unaltered since), the simplified filing form and pre-notification contacts have been increasingly used, enabling a swifter assessment and earlier decisions regarding uncomplicated matters.

During the past two years, the Portuguese Competition Authority (PCA) has been heading the transposition of the ECN+ Directive13 into Portuguese law, having already submitted to the Portuguese government the final draft transposition proposal, which is currently under discussion at the Parliament. Based on the final draft transposition proposal, it is clear that the PCA also took advantage of this opportunity to propose some adjustments to the existing Portuguese competition law framework, thus exceeding the mere scope of the ECN+ Directive, but no relevant changes were proposed with respect to the merger control legal framework.

However, over the last few years there has been wide-ranging discussion about the adequacy of the existing merger control tools in the EU, and worldwide, to capture and sufficiently assess the concentrations that could significantly impede effective competition. These discussions are starting to materialise at the EU level with direct impact in Portugal. For instance, the new guidance issued by the European Commission (EC) on the application of the referral mechanism set out in Article 22 of the EU merger regulation14 aims at ensuring the review by the EC, through referrals by Member States, of certain transactions that otherwise would escape merger control by falling below the relevant and existing thresholds. Even if the PCA has not used, to date, this mechanism, this new position has, necessarily, a relevant impact at national level, requiring to carefully assess any transaction that, although not fulfilling the national or EU notification thresholds, could justify being subject to merger control. This ends up introducing more uncertainty for businesses, increased costs, potential delays to closing and increased burdens in the drafting of the transaction documents.

In the context of the global pandemic, the PCA has also spent time evaluating options to strengthen competition regimes, with a special focus on innovation. The PCA drew attention to the importance of promoting innovation towards a better and more sustainable economic recovery. Making the protection and incentives for innovation one of its priorities for 2021, the PCA considers that the removal of structural and legislative barriers that impede innovation, efficiency and growth contribute towards a greater competitiveness between companies.15 Based on the PCA's priorities for 2021, this authority is also looking to take account of the digital transformation, looking to adapt the existing tools to this new reality and new business models.16 This evolution is likely to result in more sophisticated and diversified substantive assessment of M&A deals.

In line with the above, the PCA continues to actively pursue its goal of protecting and promoting competition in the Portuguese economy. With regard to merger control, the PCA is expected to continue to promote the use of the simplified filing form, as well as pre-notification contacts, to deliver swifter decisions and enhance transparency in the market.

In 2020, according to the available information on its website, the PCA issued 51 final decisions in merger control proceedings, including one prohibition decision.17 In 2021, so far, the PCA issued 50 final decisions. In addition, what emerges from the recent activity of the PCA relating to merger control is that it has given increasing importance and attention to gun jumping cases, imposing more severe fines. In fact, between 2019 and 2021, the PCA opened more than 10 investigations for alleged merger implementations without prior authorisation from the PCA (i.e., 'gun jumping') and has already issued two sanctioning decisions18 and one statement of objections19 related to this infringement. Before this, the PCA had issued only two sanctioning decisions for gun jumping, with minor fines.20


The reopening of economic activity after successive confinements since the first quarter of 2020 and the high level of liquidity available from investors (to which should be added the funds from the public recovery and resilience plan) lead to optimistic forecasts for M&A activity in the year to come.

In addition, the Portuguese favourable foreign investment regime, together with multiple opportunities in different sectors, contribute to Portugal definitely being on the radar of foreign investors.

Real estate is expected to continue to register an intense activity, with several relevant deals in the pipeline.

The decrease of activity as a result of the covid-19 restrictions (for instance, in tourism and retail), together with the end of the legal bank moratorium (expected for late 2021) are likely to lead to new distressed assets coming to the market and hence to opportunities for investors.

The energy sector is also expected to continue to be particularly active, not only in deals involving wind portfolios (some of which have already been signed and await completion) and other traditional renewable energy assets, but also the production of hydrogen or the exploitation of lithium.

Finally, the technology sector will continue thriving, from e-commerce to fintech and insurtech, with the Portuguese technology companies becoming more and more appealing targets for international investors.


1 Francisco Brito e Abreu and Joana Torres Ereio are partners at Uría Menéndez – Proença de Carvalho.

2 Information available on the Portuguese Statistics Institute website:

3 Information available on the Bank of Portugal website:

4 Information available on the Portuguese Statistics Institute website:

5 According to the 2020 annual report released by Transactional Track Record and Intralinks in December 2020:

6 According to the 2020 annual report released by Transactional Track Record and Intralinks in December 2020:

7 Listed companies are overseen by the Portuguese Securities Market Commission (CMVM).

8 In particular, Decree-Law No. 298/92, of 31 December, as amended, governs credit institutions and financial entities, which are supervised by the Bank of Portugal, and Decree-Law No. 94-B/98, of 17 April, as amended, governs the activity of insurance companies, which are supervised by the Portuguese Insurance and Pension Funds Authority.

9 All amounts given for the transactions indicated below result from publicly available sources.

10 According to the 2020 4Q report released by Transactional Track Record and Intralinks in December 2020:

11 ibid.

12 According to a study from Deloitte, in 2020, 89 new hotels opened in Portugal.

13 Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market, to be transposed until February 2021, available at

16 On this matter, see for example the PCA's Report on Digital ecosystems, Big Data and Algorithms, of July 2019, Available at,%20Big%20Data%20and%20Algorithms%20-%20Issues%20Paper.pdf; the PCA's Report on Technological Innovation and Competition in the Financial Sector in Portugal (2018), available at; and the PCA's Report on Competition in the Financial Sector in Portugal – Follow-up of AdC's Recommendation in the context of Issues Paper FinTech (2021), available at

17 Decision of the PCA of October 2020, in the case Grupo Transdev/Grupo Fundão (see press release 14/2020, available at

18 Decision of the PCA of March 2020, in the case HPA/HSGL (the public decision is not available at the time of publishing this article, see press release 04/2020, available at; and Decision of the PCA of August 2021, in the case Fidelidade SGOIC (the public decision is not available at the time of publishing this article, see press release 14/2021, available at

19 Case HCapital, SCA – SICAR (see press release 20/2019, available at

20 Decisions of the PCA of 26 June 2014, in the case Farminveste/Farminveste SA/ANF (PRC/2012/01) and of 27 December 2017, in the case Fundos Vallis (PRC/2012/05).

The Law Reviews content