Editor’s note: This article was first published in November 2010. All figures are from then: a 499.2-million-euro rights issue at 5.75 euros per share, 5 new shares for every 14 rights, and a subscription period from 22 November to 3 December 2010. The ownership split describes the deal as announced in 2010; Telecinco’s parent company was later renamed Mediaset España.
The plan is for Telecinco to begin an integration process under which Mediaset will control just over 40% of the new Telecinco, Prisa 18% and the remaining shareholders around 39%. At the same time, Telefónica and Telecinco will each hold 22% stakes in Digital+, and the Cuatro channel will become 100% controlled by Telecinco.
The preemptive subscription rights in Telecinco’s 500-million-euro rights issue (499.2 million, to be exact) are meant to raise the capital needed to cover the cash payment Telecinco will make to Prisa as a result of its “merger” with Cuatro.
The share price will be €5.75 for existing shareholders, a very attractive price since it is below the current market price, which is around €8–9 depending on when you read this article.
Existing investors will be able to subscribe for 5 new shares for every 14 rights (that is, old shares), with each right valued at €0.85 before the capital increase, so that price will change with the market.
For anyone who wants to take part in the rights issue without holding rights (old shares), we’ll run the numbers assuming we want to acquire 100 shares.
For every 100 shares you want to subscribe for, you’ll need to buy 280 rights, which cost roughly €240 based on the theoretical value of the right. On top of that, you have to pay for the 100 shares at €5.75 each. In total, subscribing for the 100 shares would come to €815. This amount will change as the value of the right changes.
For investors’ peace of mind, it’s worth pointing out that although the words “capital increase” keep coming up, this one has nothing in common, in its form, with the capital increase by Nueva Rumasa: in this case it has been approved by the CNMV (Spain’s securities market regulator), and the total amount of the capital increase has already been published in the Boletín Oficial del Registro Mercantil (the official gazette of Spain’s companies register).
Trading will begin this Monday, November 22, and end on December 3.
Personal investment advice: green light for the medium and long term, since a merger of this kind usually translates into higher earnings.
Featured image: Luis García, CC BY-SA 3.0, via Wikimedia Commons.
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