TDE.L Regulatory News (TDE)

30 Apr 2007 13:19

Telefonica SA30 April 2007 28/04/07 Creating a consortium, now the largest shareholder in the Italian operator with23.6% of the capital TELEFONICA, MEDIOBANCA, GENERALI, INTESA SANPAOLO AND BENETTON UNITE TO TAKE ASTAKE IN TELECOM ITALIA • The company, presided over by Cesar Alierta, will have two board members and an indirect participation of 10% in Telecom Italia Madrid, 28 April 2007.- The Board of Directors of Pirelli, in anextraordinary meeting held today, and Edizione (Benetton Group), have agreed tosell their stakes in Olimpia, principal shareholder of Telecom Italia, to aconsortium made up of Telefonica, the group's industrial partner, the insurancecompany Generali, the banks Mediobanca and Intesa Sanpaolo, and Benetton(partially reinvesting in the consortium). The operation is subject to themandatory authorisations. The new consortium, in which Telefonica holds 42.3% of the shares,will have a 23.6% participation in Telecom Italia's capital (18% indirectlythrough Olimpia and 5.6% directly), thus becoming the largest shareholder of theItalian operator. The other members of the consortium have the followingshareholdings: Generali (28.1%), Mediobanca (10.7%), Intesa Sanpaolo (10.7%) andBenetton (8.2%). The new company starts out with a capital structure of 5,145 millioneuro, representing a 2,314 million euro investment for Telefonica. An additionalcapital increase of 900 million euro is foreseen in which Telefonica will havethe right to subscribe for new shares on a pro-rata basis, in accordance withits current participation. The agreement enables Telefonica to enter Telecom Italia's Board with twomembers, a number proportionate to its 10% economic interest in the company. Inthe new company, Telefonica will have the right of first refusal on the sale ofshares, as well as veto rights in certain decisions related to share ownershipchanges, dividend policy and divestitures. This operation enables Telefonica to both strengthen its relationship withTelecom Italia, with whom it has entered into cooperation agreements in Germany,and to reinforce its position in Europe and Latin America. Nonetheless, the twocompanies (Telefonica and Telecom Italia) will be managed separately andindependently and it is foreseen that both Telefonica and the board members itappoints will abstain from participating and voting in meetings of the relevantcorporate bodies whose purpose is to consider business decisions related tocountries in which both companies have a presence. As a result of meetings with the Italian operator, Telefonica and TelecomItalia foresee the generation of synergies which would give rise to costssavings for both companies. This investment in no way alters Telefonica's commitment to the marketswith respect to limiting its financial investments this year to a net total of1,500 million euro. Shareholder Structure Mediobanca Generali Intesa Benetton Telefonica | 10.7% | 28.1% | 10.7% | 8.2% | 42.3% | | | | | | | | | | V V V V V ___________________________________________________________________________________ New Company ___________________________________________________________________________________ | 100% | | | | | V | ________________ | | Olimpia | | ________________ | | | 18% _______ | 5.6% | | 23.6% | | | _______ | V V ___________________________________________________________________________________ Telecom Italia ___________________________________________________________________________________ ANNEX: Newco investment: 100% Olimpia (2.82 euros/share) 4,118 Million euros5.6% in TI (2.53 euros/share) 1,897 Million euros Total 6,015 Million euros Newco sources of funds: Telefonica 2,314 Million eurosMediobanca (in kind) 522 Million eurosGenerali (in kind) 1,375 Million eurosIntesa 522 Million eurosBenetton 412 Million euros Total equity 5,145 Million euros Net debt 1 870 Million euros Total sources 6,015 Million euros For further information, please contact: Investor relations Telf: (+34) 91 584 4713 - (+34) 91 584 4700 Ezequiel Nieto ezequiel.nieto@telefonica.es Dolores Garci dgarcia@telefonica.es Diego Maus dmaus@telefonica.es 1 To be reduced through a potential capital increase of up to 900 Million Euros to be executed in the 6 months following the completion of the deal. This information is provided by RNS The company news service from the London Stock Exchange