* Prices offering of 23 pct stake at 5.60 euros/shr
* Originally set range of 5.25-6.50 euros/shr
* Telefonica to raise as much as 1.45 bln euros
(Updates after final pricing)
By Alexander Hübner and Kylie MacLellan
FRANKFURT/LONDON, Oct 29 Spain's Telefonica
priced the sale of shares in its German O2-branded unit
in the bottom half of its indicative range, raising as much as
1.45 billion euros ($1.9 billion) in Europe's largest new
listing in more than a year.
Telefonica said late on Monday it had sold the 23 percent
stake at 5.60 euros per share, confirming an earlier Reuters
Europe's largest telecoms company had originally set an
indicative price range of 5.25-6.50 euros per share for the
offering. That guidance was narrowed twice during two weeks of
bookbuilding, latterly to 5.50-5.60 euros.
While initial public offerings (IPOs) in Europe have begun
to pick up after months of inactivity due to choppy markets,
those working on deals say investors are still choosy about
which companies to back and are unwilling pay over the odds.
The listing, the biggest IPO in Europe since Spain's Bankia
raised 3.1 billion euros in July 2011, is part of the
Telefonica's efforts to cut its 58 billion euro debt and hang on
to its prized investment-grade rating.
Telefonica said that it had placed more than 258 million
shares with investors, raising around 1.45 billion euros
assuming a 15 percent over-allotment option is exercised.
That also makes it Germany's biggest listing since Tognum
raised 2 billion euros in July 2007.
The shares are due to begin trading in Frankfurt on Oct. 30.
In Germany, O2 is the smallest mobile operator with roughly
16 percent of subscribers, trailing Deutsche Telekom,
Vodafone and KPN's E-Plus. Some analysts have
said its targeted valuation was high compared with peers.
Telefonica Deutschland, which owns the O2 brand, has
attempted to woo investors with the prospect of a 500 million
euro dividend next year, contrasting with its parent's decision
to cancel its payout for 2012.
Analysts said investors could move their money out of
Telefonica to the German unit because of the dividend yield.
"It's possible that we could see some money coming out from
investors who are perhaps trying to play German proxys ... and
that they will come out of Telefonica to buy Telefonica
Deutschland," said Javier Borrachero, an analyst at Kepler
Capital Markets in Madrid.
"It is possible that money will be taken out of other
operators and put into Telefonica Deutschland," he added.
The sale was organised by JP Morgan and UBS.
($1 = 0.7749 euros)
(Additional reporting by Robert Hertz and Clare Kane in Madrid,
and Edward Taylor in Frankfurt, writing by Harro ten Wolde in
Frankfurt, Editing by Erica Billingham and David Gregorio)