Telefonica Deutschland (O2) is looking to raise €3.62bn (US$4.67bn) through a share issue to part-fund its €8.6bn (US$11.34bn) acquisition of KPN’s German mobile operator E-Plus.
O2 will issue 1.12 billion new shares at €3.24 each, which the…
Telefonica Deutschland (O2) is looking to raise €3.62bn (US$4.67bn) through a share issue to part-fund its €8.6bn (US$11.34bn) acquisition of KPN’s German mobile operator E-Plus.
O2 will issue 1.12 billion new shares at €3.24 each, which the telco says is a 28.3% discount on the price it calculates its stock will be at following the rights issue.
The subscription period will start on 10 September and end on 23 September.
The 77% Telefonica-owned subsidiary has given shareholders the right to buy one new share for each existing share they already own, and mandated Citigroup, HSBC, Morgan Stanley and UBS as joint global coordinators.
BofA Merrill Lynch and JP Morgan are joint bookrunners, while Santander, Bayerische Landesbank, BBVA, BNP Paribas, Commerzbank, Mediobanca and Unicredit are joint co-leads. The consortium of banks will assume all the shares that are not allotted or purchased.
KPN is selling E-Plus to Telefonica for €5bn in cash and a 20.5% stake in the new combined entity.
Upon completion of the transaction, KPN will transfer 100% of shares in E-Plus to O2 for a consideration made up of €3.6bn in cash – from the rights issue – and newly-issued shares in O2, some of it will be bought back by Telefonica for around €1.4bn.
KPN’s remaining 20.5% stake in O2 will be subject to a lock-up period of 180 days.
O2 announced this week that it will issue an additional 740.7 million new shares to fulfil the stock-based element of the purchase price.
At the end of August, the European Commission rubber-stamped the deal after a lengthy regulatory review. The companies had originally agreed on the merger in July 2013.
The Commission conditionally cleared the deal on 2 July, with final approval subject to O2 signing an acceptable agreement to sell 20% of its mobile network capacity using a mobile bitstream access model upfront, with the option to extend this to 30%.
O2 signed that agreement with MVNO Drillisch, enabling it to move on to the capital increase.
Once the rights issue completes, O2 expects to be able to close the deal this quarter.
