(Updates with Telefonica comment in second paragraph.)
June 10 (Bloomberg) -- Telefonica SA, Spain’s largest phone company, shelved a share sale of its Atento Inversiones & Teleservicios SAU unit after a discount in the offer price failed to entice investors amid tumbling equity markets.
The initial public offering of the call center business was suspended indefinitely because of “unfavorable market conditions,” Telefonica said in a statement today. It had received orders for 97 percent of the stock, according to a sales update e-mailed to clients today and obtained by Bloomberg News, after slashing the price.
Chairman and Chief Executive Officer Cesar Alierta, who had tried to sell Atento as early as in 2007, is seeking to reduce debt and focus on Latin America to offset declining domestic market share. Telefonica’s decision to suspend the Atento IPO may herald difficulties for Spanish lenders and the state in holding a series of initial public offerings this year.
“The difficult market conditions that Telefonica faced with the listing of Atento are similar or actually not as bad as the ones we can expect from Bankia and Banca Civica because of the deep trouble the banking industry is going through,” Luis Benguerel, a trader at Interbrokers in Barcelona, said by phone.
Bankia, the lender formed by a merger of seven savings banks led by Caja Madrid, plans to raise as much as 4 billion euros in an IPO next month.
Banca Civica, formed from the combination of four savings banks including Caja Navarra, also plans for a listing in July. The government is planning an IPO of lottery business Sociedad Estatal Loterias y Apuestas del Estado.
Telefonica said yesterday it had cut the lower end of the price range to 17.25 euros a share from an initial range of 19.25 euros to 25 euros and gave investors another day to place orders. At the lower price, the stock sale would have raised about 580 million euros ($833 million).
Citigroup Inc. and Goldman Sachs Group Inc. had managed the IPO, along with Banco Santander SA, BNP Paribas SA, JPMorgan Chase & Co. and Banco Bilbao Vizcaya Argentaria SA.
Telefonica’s attempt to sell Atento shares came as political wrangling over the future of Greece is infecting Europe’s markets.
The Stoxx Europe 600 Index fell for a sixth straight week today, the longest losing streak since 2008, as concern increases that Greece will default and U.S. economic indicators from housing to payrolls missed estimates.
Telefonica shares fell 1.5 percent to 16.19 euros today in Madrid trading, the biggest decline since May 6. Spanish bond yields rose to the highest in almost three weeks.
Telefonica sold a stake of its mobile unit Telefonica Moviles SA for 11 euros per share in 2000 in an initial public offering before buying it out in 2006. The Spanish telephone operator also offered 5.25 euros a share for the 62 percent it didn’t own in its internet unit Terra Networks SA in May 2003. Goldman Sachs Group Inc. led an initial public offering of Terra stock to institutional investors at 13 euros in 1999 and the stock soared to 157.65 euros in February 2000.
“Investors still remember other Telefonica listings from which we lost money such as Telefonica Moviles and Terra Networks,” Benguerel said.
Atento’s revenue rose 26 percent last year to 1.66 billion euros, with the largest part coming from Brazil, while Telefonica had sales of 60.7 billion euros. The unit’s operating profit before depreciation and amortization increased 23 percent to 190 million euros. Atento had 151,896 employees at the end of 2010, accounting for about half of Telefonica’s workforce.
--With assistance by Alexis Xydias in London and Emma Ross- Thomas in Madrid. Editors: Simon Thiel, Heather Harris.
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