Spain-based telco Telefonica (MCE:TEF; NYSE:TEF) has been struggling in line with the bailed-out Spanish economy of late, and has announced that it will sell half of its valuable stake in China Unicom (NYSE:CHU; HKG:0762) in order to slash its debts.
The sale of 1.07 billion China Unicom shares for HK$11 billion ($1.4 billion) will bring down Telefonica?s stake in Unicom ? which has China?s second-largest 3G user-base ? to 5 percent. The transaction should be completed by the end of July, and comes with a promise that the Spanish firm will not sell any more of its stake in the next 12 months. Unicom?s state-owned parent China United Network Communications Group will buy the whole of the stake back at 22 percent less than it?s valued on Telefonica?s books.
Unicom shares climbed 6.6 percent on news of the transaction yesterday, while Telefonica plunged 4.23 percent on the NYSE. China Unicom already owns 1.37 percent of Telefonica SA.
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