Telefonica has signed a swap agreement with KPN, under which KPN will trade 178 million of its shares in Telefonica Deutschland for 72 million treasury shares in Telefonica.
The treasury shares represent 1.43 percent of Telefonica’s share capital, while the shares in Telefonica Deutschland represent 6 percent of its share capital. The exchange ratio was determined by the volume weighted average price of the respective shares during the last five trading sessions. The agreement is unconditional and will be settled on 14 March.
As a result of the trade, Telefonica increases its shareholding in Telefonica Deutschland from 63.2 percent to 69.2 percent. This will increase its share in dividends distributed by Telefonica Deutschland, which is already one of the group’s largest cash flow contributors, Telefonica said in a statement.
Among other agreements, KPN has committed to comply with certain restrictions on the sale of Telefonica shares to ensure "an orderly sale", the statement said.
KPN acquired a 20.5 percent stake in Telefonica Deutschland in 2014 as partial payment for the sale of its German unit E-Plus to Telefonica. In November 2015, it sold part of the shares on the open market. After the swap, it will still hold a 9.5 percent stake in Telefonica Germany. KPN said this is seen as a financial investment, and any dividends received will be passed on to its own shareholders.
