Telefonica launches offer for 28% stake of German unit

MADRID (Reuters) - Spain's Telefonica on Tuesday said it would launch a public tender offer to buy the 28.19% of Telefonica Deutschland it does not own for 2.35 euros ($2.51) per share.

The cash offer represents a 37.6% premium to its German unit's closing price on Monday and sent shares up to the 2.35 euro mark when trading resumed after a brief suspension early on Tuesday.

Telefonica's shares were down 1.55% in Madrid, while the Spanish blue-chip index IBEX-35 was flat.

Telefonica Deutschland has a market value of around 5 billion euros and its shares had shed 26% year to date before the offer was announced.

Its Spanish parent firm directly or indirectly owns 71.81% of Telefonica Deutschland.

It said it holds instruments to acquire approximately another 1.32% of it.

The company said the offer, which is expected to start in December and run until mid-January, is not subject to a minimum acceptance threshold.

Telefonica is set to publish its multi-year strategy on Wednesday.

In July it said it planned to shift its focus to cash generation after years of restructuring.

CEO Jose Maria Alvarez-Pallete said at the time that the new strategic would focus on increasing the company's free cash flow, which he said was expected to be 4 billion euros this year.

($1 = 0.9353 euros)

(Reporting by Inti Landauro and Emma Pinedo; editing by Andrei Khalip and Jason Neely)