16th Mar 2006 12:17
Telefonica SA16 March 2006 Telefonica S.A., as provided in article 82 of the Spanish Securities Market Act(Ley del Mercado de Valores), hereby reports the following SIGNIFICANT EVENT With regard to TELEFONICA MOVILES, S.A., in which TELEFONICA S.A. has,directly and indirectly, an interest of 92.46% of its share capital,TELEFONICA S.A would like to inform hereby of its intention to submit aproposal to negotiate a possible merger between both companies to TELEFONICAMOVILES, S.A. Board of Directors. TELEFONICA, S.A. intends to propose an exchange ratio of four shares ofTELEFONICA, S.A. for each five shares of TELEFONICA MOVILES, S.A.Nonetheless, this exchange ratio will be subject to the valuation analysis ofboth companies, which will be submitted to their respective Boards of Directorson the meetings to be held on March 27th, 2006 (TEM) and on March 29th 2006(TEF). Should the transaction proceed in accordance with the proposed terms, the Boardof Directors of TELEFONICA S.A will propose to its General Shareholders'Meeting an increase of its share capital of a maximum of 261,320,118 shares,deducting, if applicable, the number of shares owned as treasury stock byTELEFONICA S.A at the moment of such capital increase. As of today, TELEFONICA S.A owns approximately 3.9% of its share capital astreasury stock. Madrid, March 16th , 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
TDE.L