Telefónica in Deal for Telecom Italia Controlling Stake

MADRID, April 30: Spain’s Telefónica and a group of Italian investors are shelling out 4.1 billion euros for a controlling stake in Telecom Italia.

In winning the stake, the consortium beat out U.S. giants like AT&T and Mexican mogul Carlos Slim, who attempted to acquire Telecom Italia. The consortium includes the insurance company Generali, the banks Mediobanca and Intesa Sanpaolo and the Benetton Group. They are acquiring the stakes held in Olimpia, the principal shareholder in Telecom Italia, by Pirelli and Edizione (Benetton). The consortium will own 23.6 percent of Telecom Italia. Telefónica holds 42.3 percent of consortium holding company. The other members of the consortium have the following shareholdings: Generali (28.1 percent), Mediobanca (10.7 percent), Intesa Sanpaolo (10.7 percent) and Benetton (8.2 percent). The new holding company starts out with a capital structure of 5,145 million euros, of which Telefónica contributed 2,314 million euros. An additional capital increase of 900 million euros is foreseen in which case Telefónica will have the right to subscribe for new shares on a pro-rata basis, in accordance with its current participation.

Telefónica will have two board seats at the Italian telecommunications giant. In a statement, the company said the deal would allow it to strengthen its position in Europe and Latin America.