Morgan Stanley notified the National Stock Market Commission (CNMV) on Monday night a 12.178% stake in Telefónica which includes the 9.9% that the financial institution acquired for the Saudi group STC and for which it assumes the risk through a hedging derivative called ‘put/call option’ (buy/sell option).
Specific, STC owns 4.9% of Telefónica’s share capital and the remaining 5% in financial instruments. Due to Spanish regulations on foreign investments in strategic listed companies, to exceed 5% in Telefónica – with a large presence in the national defense sector – the Saudi group needs the Ministry of Defense to give its approval to the operation.
In this context, the hedging derivative that Morgan Stanley has made available to STC – and which by regulation must be communicated to the CNMV – would allow the Saudi group to order the US investment bank to recover possession of that 5% of Telefónica. to sell it on the market or carry out other operations in the event that the Ministry of Defense decides not to approve the operation.
Nevertheless, The hedging derivative affects the 9.9% that STC has acquired for 2,100 million euros, Therefore, if Defense does not approve the operation, the Arab group could also decide to get rid of the other 4.9%, although another option would be to keep it, given that to hold that percentage it does not need approval from the Government, as it is below of the 5% threshold established in the regulations.
As market sources have explained to Europa Press, other possible conditions that could have been established in this risk coverage derivative is that Morgan Stanley would recover possession of the stake in the event that the shares of the Spanish operator fell below a certain value. , or even if they exceed a certain threshold.