Telefónica butters up TEM shareholders with special dividend

30 Mar 2006

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.

Spain, Telefonica, Telefonica Moviles Group