Telefónica $2 bln German swoop is cheap but risky

Telefonica Deutschland Holding AG

07/11/2023 12:38

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Pamela Barbaglia
       LONDON, Nov 7 (Reuters Breakingviews) - The Spanish
telco is offering to buy out its Teutonic arm’s minority
investors. On the surface, it’s a good time to pounce given the
unit’s recent slump. But the immediate financial benefits are
sketchy, and the debt-laden parent may have to wait years for a
German turnaround.
    Full view will be published shortly.
    Follow @pamela_msg on X
    
    CONTEXT NEWS
    Spanish telecoms group Telefónica on Nov. 7 launched a
public tender offer for the 28% it does not already own of its
German unit, Telefónica Deutschland.
    The cash price of 2.35 euros per share is 38% above the
target’s Nov. 6 closing price.
    Telefónica Chief Executive José María Álvarez-Pallete will
unveil a new strategic plan on Nov. 8, with a focus on
increasing the company’s free cash flow.
    Telefónica Deutschland shares rose by 38% to 2.35 euros as
of 1206 GMT on Nov. 7. Spain’s Telefónica fell by 1.8% to just
under 3.66 euros.

 (Editing by Liam Proud and Oliver Taslic)
 ((For previous columns by the author, Reuters customers can
click on  BARBAGLIA/ 
pamela.barbaglia@thomsonreuters.com; Reuters Messaging:
pamela.barbaglia.thomsonreuters.com@reuters.net))