Telefónica Deutschland Holding AG Faces Delisting with Tender Offer from Telefónica Local Services GmbH

On March 7, 2024, a significant development unfolded in the German telecommunications industry as Telefónica Local Services GmbH announced a tender offer aimed at the acquisition of Telefónica Deutschland Holding AG's shares. This move is designed to facilitate a public delisting of the latter from the Frankfurt Stock Exchange. Telefónica Local Services GmbH, a direct wholly-owned subsidiary of Telefónica, S.A., holds approximately 7.86% of Telefónica Deutschland’s share capital and voting rights. In a collective holding, Telefónica, S.A. itself commands about 94.35% of the share capital and voting rights, directly and indirectly.

The offer set forth is to acquire all the outstanding shares of Telefónica Deutschland not already owned by the bidder at a cash consideration of EUR 2.35 per share. This decision reflects a strategy to enable remaining shareholders of Telefónica Deutschland to liquidate their holdings at an attractive price. An additional point of interest is the explicit intention, post-delisting, to reevaluate Telefónica Deutschland’s dividend policy, which currently confirms a dividend of EUR 0.18 per share for the fiscal year 2023.

Telefónica Local Services GmbH and Telefónica Deutschland have also entered into an agreement endorsing the delisting. Telefónica Deutschland has agreed to seek revocation of its Frankfurt Stock Exchange trading admission before the tender offer's acceptance period expires. This delisting will consequentially limit share liquidity and availability, potentially affecting share prices negatively. The tender offer is expected to commence in late March or early April 2024 with a four-week acceptance window.