Telefónica wonders at AT&T’s news on takeover bid

Monday’s scoop about the abortion of AT&T’s takeover bid on Telefónica was a short-lived bubble within the corporate sector. Denials and clarifications from the Spanish front appeared almost simultaneously to the news.

As published by the national daily El Mundo, Spain’s government would have stopped a friendly takeover bid from the US telecomunications group AT&T to acquire 100% of Telefónica. The offer would include a payment of €70 billion as well as the absortion of Telefónica’s €52-billion debt, which implied a premium around 30% for the Spanish firm’s shareholders. Sources from AT&T would have informed the government about its plans, the government rejected the idea and finally the US corporation decided to abort the operation, already in its final stage.

Early this morning Telefónica hastened to deny “categorically” that information by reporting to the Spanish Stock Market Commission (CNMV) that “ the company did not received any notification nor was it approached in written or verbal form of interest from anybody.” Sources of Telefónica confirmed later to The Corner that this statement summed up the company’s version about the facts.

Most of Spanish financial analysts collected and commented the news in their daily market reports. Most of them agreed it would confirm the interest of international investors in Spanish names, and also could reactivate minor corporate moves in the sector such as the interest of Vodafone in Kabel Deutschland, or the possible acquisition of Telefónica itself in Ireland by Liberty Global.

Bankia’s team, for example, did not seem so sure about the operation because “in the M&A activity, Telefónica has never looked like a prey. Rather, its historical role as a consolidator within the sector has usually punished the company”. Others like Javier Flores at Asinver were in line with Telefónica’s denial and twitted that “the matter about Telefónica is just a lie, a false rumour from a specific broker”. “People in Telefónica cannot believe the news,” explained the expert to The Corner. Flores also assured again that “the rumour has been created by a malicious source” with the aim of heating up specific trading in the Stock Exchange. According to the expert “ the company would be more interested in preparing new layoffs or launching its TV subsidiary than in transactions this size.” Furthermore, that operation would not make sense into the “new business strategy” of Telefónica, which far from its “old regional model”, intends to put the spotlight on, add value to, and even push these subsidiaries to go public.

The Spanish Industry ministry José Manuel Soria expanded Telefónica’s bubble a bit more when he admitted in a TV interview that “ in some meetings with AT&T’s managing team, its president told me that they were interested in Europe but not a word about a possible offer on Telefónica.”

Who tells the truth about AT&T and Telefónica remains unknown. The only real answer is the one given by Madrid Stock Exchange: Telefónica’s shares increase by 2.69% to €10.30, while in early hours had climbed to 4% with an intraday maximum of €10.42.