Telefonica Said to Rush to Save Telxius IPO Amid Low Demandby , , and
Spanish firm said to consider lowering price range, postponing
Investors balked at previous price of up to 15 euros a share
Telefonica SA is scrambling to rescue the initial public offering of infrastructure unit Telxius Telecom SA amid insufficient demand for the shares, according to people familiar with the matter.
The Spanish carrier is weighing lowering the price range, reducing the size of the deal or postponing the listing, said the people, who asked not to be identified because deliberations are private. Telefonica is entering the last day of the sale without sufficient orders for all the stock on offer, said the people. No final decisions have been made and the sale could still go ahead, they said.
Telefonica and banks have been meeting to discuss options including a new price range, below the previously announced 12 euros to 15 euros a share, the people said. Investors are struggling to value Telxius’s submarine cable business and also know that Telefonica is a motivated seller seeking to raise cash, which makes it easier to request a discount, according to two of the people.
Telxius’s share price is scheduled to be set on Thursday, with Telefonica aiming to sell as much as 40 percent of the company’s shares, according to the IPO prospectus. The offering is part of Telefonica’s drive to raise cash to reduce debt and show it can sustain its dividend. The company had originally sought a valuation of about 3.5 billion euros for the unit, people familiar with the matter have said.
A Telefonica representative declined to comment.
The company is also working on the possible listing of its U.K. unit, O2, which could happen as soon as this year if market conditions are appropriate, Chairman Jose Maria Alvarez-Pallete said this month.
Telefonica shares rose 1.3 percent to 9.46 euros in Madrid at 10:27 a.m. The stock has declined 7.6 percent this year.