The boards of Spanish telecoms groups Telefónica and Telefónica Moviles (TEM) have approved the two companies’ proposed merger. Telefónica will buy the 7.5% of mobile unit TEM it does not already own, after TEM investors were offered a special dividend to agree to the deal. Moviles shareholders will receive two extraordinary dividends worth a total of EUR0.435 gross a share, to be paid on 21 July, the same day as a EUR0.205 a share ordinary annual dividend. The dividend came after Telefónica’s original offer – of four of its own shares for five TEM shares – was criticised for being too low. Telefónica aims to fund the merger using its own treasury stock and a capital increase. The merger is due for closure in August 2006.