Telefonica, the Spanish telecommunications company, was up sharply this morning on the Madrid Stock Exchange after it was announced on Tuesday evening that the Saudi group STC acquired a 9,9% stake for €2,1 billion, thus becoming the largest shareholder.
Participation consists of 4,9% of the shares of Telefonica and in the financial instruments that confer them another 5% of so-called economic exposure to society. STC intends to secure the voting rights for that 5% after receiving the necessary regulatory approvals.
Telefonica performed well in Madrid, reaching 3,831 euros, an increase of 2,13%. At an operational level, the session is expected to continue in a bullish mood, industry experts say, with first resistance seen at 3,877 and the next at 4, while support is seen at 3,956.
The Saudis don't want control
It is possible that this acquisition will attract the attention of the Spanish government which considers Telefonica a company of strategic importance, and by the way in Spain, acquisitions greater than 5% generally require government approval. Telefonica has for some time counted as its main investors two Spanish banks, CaixaBank SA and Banco Bilbao Vizcaya Argentaria SA, which together own less than 10% of the company.
Saudi Telecom has clarified in a statement that it does not intend to acquire control or the majority of Telefonica. “We view this as an attractive investment opportunity to leverage our strong balance sheet while maintaining our dividend policy,” he said, “and it reflects confidence in Telefonica's management team, its strategy and its ability to create value.
The STC Group is listed on the Saudi Stock Exchange with a market capitalization of 49,2 billion euros.
The acquisition comes as Telefonica executive chairman Jose Maria Alvarez-Pallete is preparing to outline a new vision and strategy for his company at an investor day in November. Pallete, who has held the top position since April 2016, has struggled for years to attract investors and significantly grow profits in Spain, the company's main market. The stock is down about 60% since he took over.
Telefonica also operated in Italy
In 2007 Telefonioca was the object of attention of several companies in Italy. In February of that year Telecom Italy had entered into negotiations with Telefónica for the latter's entry into Olimpia, the holding that controlled 18% of the former Italian monopolist, which was later suspended. But after just one month, in March 2007, the company took an interest in Telecom again, and the following month it created a cordata with Mediobanca, Generali, Intesa Sanpaolo, and Benetton, which on April 28, 2007 launched an offer for the purchase of Olimpia from Pirelli; the offer was accepted by the Tronchetti Provera company and was implemented on 24 October of the same year.
Shortly thereafter, Telefónica sold Endemol to a consortium made up of Mediaset (and its subsidiary Telecinco), Goldman Sachs and John de Mol, for 3 billion euros. After the exit of Benetton, Telefonica owned 46,179% of Telco which owned 22,447% of Telecom Italia. In September 2013 Telefonica increases its stake in Telecom Italia: it will have 66% of Telco, of which 46,2% with voting rights, Generali 19,32%, with 30,6% voting rights, and Intesa Sanpaolo and Mediobanca both have 7,34%, with voting rights equal to 11,6%. From January 2014, subject to a favorable opinion from the Antitrust authority, Telefónica will be able to acquire 100% of Telco. In July, Telefónica acquires 11,11% of Mediaset Premium pay TV for 100 million euros. But then Telefonica offers the French of Vivendì to buy the shares of the Italian company. Vivendi accepts and finds himself the new shareholder of Telecom.
