Telefonica launches offer for 28% stake it does not own in German unit

Spanish telecom firm Telefonica (BME:TEF) said on Tuesday it has agreed to launch a public tender offer to buy the 28.19% stake it does not own in its German unit, Telefonica Deutschland, for 2.35 euros ($2.51) per share in cash.

Shares of Telefonica Deutschland closed at 1.7075 euros on Monday evening. They were suspended on Tuesday morning following the tender offer annoucement.

The German unit has a market value of around 5 billion euros and its shares are down 26% year-to-date. The Spanish telecom firm owns directly or indirectly 71.81% in Telefonica Deutschland

The announcement by Telefonica comes a day before it will publish its multi-year strategy on Wednesday.

Telefonica said in July it would shift its focus to cash generation after years of restructuring its business.

Its chief executive Jose Maria Alvarez-Pallete said he would present a new strategic plan on Nov. 8 with a focus on increasing the company’s free cash flow, which he said was expected to be 4 billion euros this year.

($1 = 0.9353 euros)