MADRID (dpa-AFX) - Telefonica Deutschland Holding AG, the German unit of Spanish telecom operator Telefonica S.A (TDE.L, TEF), said Monday that it will sell shares worth 3.62 billion euros, or $4.66 billion, to help partially finance its acquisition of the German mobile telecom business E-Plus from Dutch telecom operator Royal KPN NV (KPN, KKPNY.PK, KKPNF.PK).
In July 2013, Telefonica Deutschland said it agreed to acquire E-Plus from KPN in a deal valued at 8.55 billion euros. The deal will see KPN receiving 3.7 billion euros in cash and an initial stake of 24.9 percent in Telefonica Deutschland.
The merger will combine the third and fourth largest mobile network operators in Germany. The acquisition will put Telefonica Deutschland on par with market leaders such as Deutsche Telekom AG (DTEGY) and Vodafone Group plc (VOD, VOD.L).
Telefonica Deutschland said Monday that it will issue 1.117 billion new shares in the rights issue, which are endowed with full dividend rights as of January 1, 2014, at a subscription price of 3.24 euros per share. The offer price implies a 28.3 percent discount to the theoretical ex-rights price or TERP.
The company will offer the new shares to shareholders in the ratio of 1 to 1, which means that one outstanding share entitles the holder to subscribe for one new share. The offering is intended to raise gross proceeds of about 3.62 billion euros.
The new shares are expected to be included in the stock exchange trading of the shares in the company on the regulated market of the Frankfurt Stock Exchange on September 25, 2014.
Telefonica, which indirectly holds 76.83 percent of the equity capital of Telefonica Deutschland, has undertaken to exercise its subscription rights in full.
In addition, the consortium of banks that are underwriting the offering have undertaken to assume all shares not allotted or purchased upon closing, at the issue price.
The subscription period is expected to start on September 10 and run until September 23, 2014. From September 10 to September 19, 2014, the subscription rights will be traded on the regulated market of the Frankfurt Stock Exchange.
In connection with the acquisition of E-Plus, Telefonica Deutschland plans to issue a further 740.66 million new shares, against contribution in kind with regard to which subscription rights of existing shareholders are excluded.
TEF closed Monday's trading at $15.87, down $0.15 or 0.94 percent on a volume of 568,299 shares.
Copyright RTT News/dpa-AFX