Juan Villalonga, the embattled chief of telecoms and entertainment giant Telefonica, has reportedly stepped down after a little more than four years at the helm of Spain's largest corporation. His resignation comes less than 48 hours after Telefonica won shareholder support for its purchase of Dutch entertainment force Endemol.
According to reports that surfaced on Tuesday evening on the Internet sites of two Spanish financial papers Expansion and Cinco Dias, Cesar Alierta, chairman of French-Spanish tobacco group Altadis, will be anointed as Villalonga's replacement at a showdown board meeting on Wednesday. Expansion valued Villalonga's severance package at around $25m.
As chairman, Alierta will wield less overall power than Villalonga, who carried the title of executive chairman. Instead, some of Villalonga's former responsibilities are expected to be delegated to one or more chief executives handpicked by the board to run Telefonica's different divisions on a day-to-day basis.
Villalonga's departure, rumored imminent for weeks, follows the investigation this summer by Spain's stock market watchdog into allegations that he benefited from insider information when he bought and sold stock options on Telefonica in January 1998. As the controversy built up around him these past few weeks, Villalonga chose to stay out of the Madrid spotlight, lying low of late in Miami.
The colourful Villalonga is credited with Telefonica's immense growth over the last four years, transforming what was an old-style state monopoly into one of the most aggressive multinationals in Europe. Under him, Telefonica's market value has multiplied by a factor of six, thanks to expansion of the company's telecommunications and multimedia businesses, particularly overseas where he invested heavily and created affiliates across Europe, Latin America and more recently the US.
Just this Monday, the conglomerate's multimedia division Telefonica Media closed a Euro 4.79bn acquisition of Endemol, after securing overwhelming shareholder support for the deal. Telefonica's Internet arm Terra Networks also made world headlines in May with its proposed buy out of the US internet portal Lycos for an estimated $12.5bn.
Despite the growth, Telefonica's shares have fallen steeply over recent months, due in part to the controversy and instability surrounding the company's chairman. Analysts -- many of whom were predicting that investors had finally reconciled with the idea that Villalonga could leave -- expected that Villalonga's departure could put an end to the share volatility.
It appears that Telefonica may not have had much choice in picking a successor. Alierta, who began his career with the Spanish bank Banco Urquijo in 1970, was one of just two Telefonica board members who have sat on the board for more than three years, the minimum requirement for a prospective chairman under company by-laws. Hiring a complete outsider would have meant changing those corporate articles, a lengthy process at a time when the markets were demanding a quick resolution.