Shares in Telefonica have risen 3% following a report that US giant AT&T had been blocked from acquiring the indebted incumbent for an enterprise value of roughly €120bn (US$160bn) by Spain’s government.
Telefonica responded to the report, published…
Shares in Telefonica have risen 3% following a report that US giant AT&T had been blocked from acquiring the indebted incumbent for an enterprise value of roughly €120bn (US$160bn) by Spain’s government.
Telefonica responded to the report, published in Spanish newspaper El Mundo, by saying it had “not received any approach, nor any indication of interest, neither verbal nor in written form, from any party”.
AT&T is said to have approached the Spanish government to float the idea of an acquisition and got knocked back by politicians – including the Prime Minister Mariano Rajoy – because Telefonica was viewed as a strategic asset to the country, El Mundo reported citing sources with knowledge of the situation. It planned to bid €70bn (US$93bn) and take on Telefonica’s €52bn (US$69bn) debt, the report said.
Spain’s industry minister has denied any knowledge of an AT&T approach for Telefonica in an interview on Spanish television cited by the Financial Times. However he said he met with AT&T’s CEO Randall Stephenson earlier this year, and the executive admitted interest in Europe.
AT&T has been heavily linked with an acquisition in Europe although Telefonica has not been touted as a target. Vodafone, KPN, EE and Liberty Global have all been mooted as potential acquisitions, Vodafone most strongly.
“AT&T’s recently developed interest in European regulation has been seen as likely to result in a European telecom investment,” said Bernstein Research analysts, “But the interest has always been presumed to be in Vodafone, not Telefonica.”
Bernstein speculated that AT&T may be more attracted to Europe’s foothold in emerging markets than its cheap valuations.
The analysts also suggested that AT&T may be facing more difficulty in the US market than imagined by the market.
“It seems likely that AT&T will find some way to spend their money. That probably reflects more on their difficulties at home than on anything else.”
