Telefónica cancels €1.2bn Telxius IPO
30 September 2016 | Jason McGee-Abe
Telefónica has cancelled the listing of its subsea cable infrastructure and telecommunications tower unit, Telxius, citing weak investor demand for the share sale.
"Regarding the offer to sell shares of its infrastructure unit, Telxius Telecom, Telefónica has decided to withdraw the said offer, due to inadequate valuation of Telxius, implicit in the purchase orders received," a company statement said after markets closed yesterday.
“Telefónica confirms that it will continue to analyse strategic alternatives in relation to the asset."
Telefónica had initially sought a valuation of as much €3.75 billion for Telxius in selling up to 40% of the unit which was launched in February 2016. The decision to call off the sale was reached together with the banks managing the IPO.
Telefónica had stated earlier this month that it was looking to float 25% of the shares in its newly-created Telxius unit and that it had revived the idea of selling shares in O2, either to outside investors or through a share flotation.
It has been reported that Telefónica and its advisers had been scrambling to rescue the IPO, including weighing lowering the price range or reducing the size of the deal amid insufficient demand for the stock, but to no avail. Telefónica is rumoured to have wanted to sell the unit to pay down its debt, and the Financial Times reports that this was due to “investors demanding a discount for the company’s undersea cable business”.
Telefónica is highly indebted, to the tune of €53 billion, and is looking for ways to reduce that figure.
After the Commission blocked Hutchison’s takeover, it is known that the existing management of O2 UK looked at a variety of deals, including a flotation or a partial sale, but in June appeared to have decided to hold on to the business.
Speaking to reporters earlier this month, José María Álvarez-Pallete, chairman and CEO of Telefónica, had said the company is considering "a listing or the entry of new shareholders in O2 UK", and added that the decision will be made "in the coming weeks".
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