Telefónica announces public acquisition offer for Telefónica Deutschland

Telefónica, S.A., through Telefónica Local Services GmbH (the “Bidder”), a wholly-owned subsidiary of Telefónica, has decided to make a voluntary public acquisition offer in the form of a partial offer to the shareholders of Telefónica Deutschland Holding AG (“Telefónica Deutschland”), to acquire up to 28.19% of Telefónica Deutschland shares, which are not already held (directly or indirectly) by Telefónica (the “Offer”).

The Offer price of EUR 2.35 per Telefónica Deutschland share, represents a premium of approximately 37.6% over the closing price of the shares on the Frankfurt Stock Exchange on 6 November 2023 and a premium of 36.3% over the preceding 3-months volume-weighted average price of the shares.

Telefónica currently (directly and indirectly) holds approximately 71.81% of the shares in Telefónica Deutschland. In addition, Telefónica holds instruments that give the right to acquire approximately 1.32% of shares in Telefónica Deutschland.

The Offer reinforces Telefónica’s strategy to focus on its core geographies (Spain, Brazil, Germany and the UK) and its strong commitment to the German market, representing one of the most attractive and stable telecom markets in Europe.

The Offer also supports Telefónica’s efforts to simplify the group’s structure.

In the context of the Offer, Telefónica intends to promote a revision of the current Telefónica Deutschland dividend policy beyond the already-confirmed EUR 0.18 dividend per share for financial year 2023 and expected to be paid in 2024. Telefónica Deutschland’s future dividend policy will be reflective of the needs resulting from the implementation of its current business plan, and accordingly be subject among other things to Telefónica Deutschland’s future spending and investment plans, as well as to other existing or potential risks and contingencies. The Bidder and Telefónica intend to evaluate Telefónica Deutschland’s dividend policy over time jointly with Telefónica Deutschland’s management team. Consequently, Telefónica believes the Offer provides an attractive opportunity to access liquidity at a significant premium for all shareholders, in particular for those focused on the current dividend policy.

The Offer will be made in accordance with the terms and conditions set forth in the offer document to be approved by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin).

The acceptance period for the Offer will commence upon the publication of the offer document. The Offer will be subject to a customary market MAC (Material Adverse Change) condition and may be subject to regulatory approval, to the extent required. The Offer will not be subject to a minimum acceptance threshold.

Bank of America and J.P. Morgan are acting as financial advisors, and Gleiss Lutz, Davis Polk & Wardwell LLP and Uría Menéndez as legal advisors to Telefónica.

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