The Government will buy 10% of Telefónica and will become the majority shareholder to stop the Saudis
The Council of Ministers has agreed to order the State Society of Industrial Participations (SEPI) to carry out the acquisition of up to 10% of the share capital of Telefónica, as reported by the public holding company to the National Securities Market Commission (CNMV). ) this Tuesday. In this way, Spain will be the majority partner, exceeding the 9.9% of shares recently acquired by STC, the Saudi telecom company.
“Telefónica is a leading company in the field of telecommunications, both in Spain and internationally.. “It develops a set of activities that are of crucial relevance for the economy, the productive fabric, research, security, defense and, ultimately, the well-being of citizens,” adds the Government in the text that accompanies the decision on the acquisition.
“With a vocation for permanence, SEPI's participation will provide Telefónica with greater shareholder stability so that the company achieves its objectives and, therefore, will contribute to the safeguarding of its strategic capabilities.. SEPI will proceed to carry out the procedures and actions that allow the process to be launched to, minimizing the impact on the price, complete the acquisition of the necessary volume of shares,” he adds.
This movement comes to counteract the maneuver of the telecommunications operator Saudi Telecom (STC), which recently acquired 9.9% of Telefónica's shares for 2.1 billion euros, with which the company, managed by the State of Saudi Arabia became the largest long-term shareholder of the telecom company, well above BBVA (4.87%), BlackRock (4.48%) or Caixa (3.5%).
That 10% stake in the telecommunications company would be equivalent to 2.5 billion euros, given that its capitalization currently amounts to 20.5 billion.
Calviño: Telefónica is “the most strategic company” in Spain, “due to its weight in the field of security and defense”
After hearing the news, the first vice president and Minister of Economy, Nadia Calviño, pointed out in the corridors of the Senate that the Executive's decision is in line with other European countries, such as France and Germany, “which have or are even increasing their public participation in large strategic telecommunications operators”.
According to Calviño, Telefónica is “the most strategic company” in Spain, not only because of its presence in telecommunications infrastructure and in the field of technological innovation, but also “because of its weight in the field of security and defense.”. “It is a decision that aims to provide stability so that the company can achieve its strategic objectives,” he stated.
Sepi was analyzing the operation since October
Last October, Sepi confirmed to the CNMV that it was analyzing a possible acquisition of a shareholding in Telefónica, although at that time it highlighted that it had not made a decision.
Specifically, the company had been “monitoring” the situation of the main Spanish “teleco” and was carrying out “an internal exploratory analysis related to a possible acquisition of a shareholding in said company.”
Stocks rise on the New York Stock Exchange
Telefónica shares listed on the New York Stock Exchange (NYSE) rose almost 4% after learning of the Spanish Government's decision to mandate the State Society of Industrial Participations (SEPI) to acquire up to 10% of Telefónica, an announcement carried out at the close of the market in Spain. Specifically, minutes after hearing the news, Telefónica's American Depositary Receipt (ADR) rose 3.86% on the New York Stock Exchange, up to $4.04.
An ADR is a US negotiable certificate that represents ownership of shares of a company incorporated outside the US.. Telefónica ADRs are listed and traded in US dollars on the US stock exchange.. Likewise, ADR dividends are paid in US dollars. These are securities designed specifically to facilitate the purchase, holding and sale of foreign securities by U.S. investors and to provide a financial instrument for non-U.S. corporations.