The Spain-based Telefonica SA made an official statement today, revealing that it reached an agreement with Drillisch AG to sell 20% of its network capacity in an attempt to win the approval of antitrust regulators for its acquisition of the E-Plus division of Royal KPN NV.
The company said in its statement, which was cited by Reuters that Drillisch agreed to purchase “20 percent of the capacity of all mobile networks that will be under the control of Telefonica Deutschland following the consummation of the proposed acquisition of E-Plus Group.” As reported by Bloomberg, Telefonica SA also added: “By means of the agreement certain remedies shall be implemented, which Telefonica Deutschland offered during merger control proceedings in order to remove competition concerns of the European Commission.”
According to the information the company disclosed in its statement, Drillisch is to purchase 20% of the total capacity of all mobile networks that will be held by Telefonica Deutschland Holding AG after the transaction of E-Plus is to be finalized over five years. Telefonica SA explained that the agreement will be put in action only in case the E-Plus units acquisition is approved by the European Commission. The decision of the latter is expected to be made until the end of July.
In addition, as Telefonica SA revealed, its rival Drillisch AG will have the right to purchase up to 10% additional capacity of the same networks. Access to the future joint network between Telefonica and E-Plus division will also bi provided to Drillisch under the terms of the deal.
The collaboration between Telefonica Deutschland, which is the German unit of the Spanish company Telefonica SA, and Drillisch AG follows the acquisition of the E-Plus unit that was reached in 2013. The cash and stock deal is estimated at 5 billion euros in cash and a 20.5% stake in the combined business.
Telefonica SA was losing 0.35 to trade at 12.71 euros per share by 8:10 GMT, marking a one year change of +31.37%. According to the information published on the Financial Times, the 32 analysts offering 12-month price targets for Telefonica SA have a median target of 11.75, with a high estimate of 14.70 and a low estimate of 8.20. The median estimate represents a -7.88% decrease from the last price of 12.76.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
