Pelé wins multimillion-dollar lawsuit from UOL portal.

Fernando Porfírio_247 - Former soccer player Pelé has reversed the situation and successfully redressed losses in court caused by UOL's acquisition of Zip.Net's shares. The merger created a partnership between Grupo Folha, through Universo Online (UOL), and Grupo Portugal Telecom. The partnership was formed in a negotiation – at the time (2001) – worth approximately US$100 million. With the acquisition, UOL acquired the rights to use the soccer star's brand and image online. Last week, the São Paulo Court of Justice ruled that the 2001 transaction was flawed because it violated the right of first refusal clause established in a previous contract signed between Pelé Sports e Marketing and ZipSports. This contract stipulated the exploitation of the soccer star's brand and image rights online. The market value of the shares will be determined during the settlement phase of the court judgment, with monetary adjustments.

In November 1999, Edson Arantes do Nascimento and Pelé Sports signed a licensing agreement for the use and exploitation of his brand and image with ZipSports. Through the agreement, the player exclusively and indefinitely granted the partner the right to exploit his image, which would be displayed on a website (Pelé.Net). To finalize the deal, the football player received a symbolic amount of R$ 5 and Pelé Sports R$ 45 million, used to raise 45 shares in the company.

ZipSports was owned by Pelé Sports and Zip.Net. The company had been created three days before the contract between the partners was signed. One clause of the contract stipulated that any partner wishing to sell their shares to third parties should give their partner the right of first refusal. A holding company was created to control Zip.Net. However, in April 2001, Grupo Folha, which controlled UOL Inc., and Grupo Portugal Telecom, which acquired the holding company's accounts and took control of Zip.Net, entered into a multi-million dollar agreement worth approximately US$100 million. The deal resulted in UOL acquiring all the shares of Zip Holding, the controlling company of Zip.Net. The Portuguese group acquired 17,5% of UOL's shares and, in exchange, transferred all its internet assets to UOL. Among these assets was the exploitation of the Pelé brand on the internet.

The merger became the subject of litigation and led businessman Pelé and his company Pelé Sports to question the fairness of the deal. In Pelé's opinion, the merger was irregular because it violated his right of first refusal to purchase the shares, and this right was not respected. UOL argued that the dissatisfaction was unfounded because the transfer of shares held by Zip.Net in ZipSports to Zip Holding occurred between companies within the same group, which constitutes a mere corporate organization.

UOL further argued that at the time of the share transfer, Pelé Sports was represented by partner Hélio Viana de Freitas, who had the power to represent the company, even independently. Hélio Viana was a partner of Edson Arantes do Nascimento in Pelé Sports.

The 3rd Chamber of Private Law of the Court of Justice of São Paulo understood that the transfer of Zip.Net shares cannot be classified as a mere corporate reorganization between companies of the same economic group. According to Judge Egídio Giacoia, the transaction involved a third party and aimed to enable another deal entered into by Grupo Folha, controller of UOL Inc., and Grupo Portugal Telecom, which already controlled Zip.Net. "In short, the ultimate purpose of the deal involved the sale to third parties of quotas and/or subscription rights, under any title, belonging to Zip.Net in ZipSports to Zip Holding, with the sole objective of completing the incorporation of Zip.Net's controlling company, Portugal Telecom, with UOL Inc. S.A.," concluded Judge Egídio Giacoia.

According to Giacoia, UOL, the third party in the negotiation, ended up acquiring the social quotas, violating Pelé Sports' right of first refusal and also affecting the rights of the player Pelé, which would be the use and exploitation of the brand and the athlete's image.