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Villalonga quits Telefónica
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July 26, 2000: 2:20 p.m. ET
Spanish telecom ousts deal-hungry CEO as new insider trading probe looms
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LONDON (CNNfn) - Spanish telecommunications company Telefónica SA ousted Chairman and Chief Executive Juan Villalonga Wednesday, bringing an end to a four-year tenure marked by explosive growth and a welter of mergers and acquisition activity.
The former monopoly, which had 1999 revenue of $23.2 billion and is still part-owned by the Spanish government, tapped Cesar Alierta, chairman of Franco-Spanish tobacco group Altadis SA, as the new chairman of Spain's biggest company.
"It's a great opportunity and a significant challenge to lead Telefonica as chairman of the board," Alierta said. "During the last four years, Telefonica has become one of the world's great telecommunications companies. My goal will be to continue creating value for shareholders and to bring the company to the greatest possible heights."
The announcement ends weeks of speculation that Villalonga's departure was looming. He has faced mounting pressure to step down after the government revived in investigation into alleged insider trading by the 47-year-old executive, who lives in Miami.
 Telefónica (TEF: Research, Estimates) has denied any wrongdoing by Villalonga.
"In the course of our conversations about the best way to create value for the entire company, shareholders, customers and employees, we have agreed that now with the development of several strategic initiatives which have been a great success, the time has come for a change in the chairmanship of Telefonica," Villalonga said.
Villalonga called Alierta an "active and valued member of the board of directors of Telefonica and Terra."
Throughout the late 1990s Villalonga took Telefónica, Europe's fourth-largest telecom company, on an acquisition spree across Latin America, recently capping his efforts with a $12.5 billion buyout by Terra Networks, Telefonica's Internet service provider arm which Villalonga also chairs, of U.S.-based Lycos (LCOS: Research, Estimates).
The market value of Telefonica has risen nearly fivefold during his tenure.
Villalonga was brought on as the helmsman of Telefónica by Prime Minister Jose Maria Aznar, a former school friend, in June 1996. But relations between the two began to sour last year.
Villalonga's penchant for deal-making hasn't always borne fruit. In early May, talks toward a deal with Netherlands-based KPN fell apart after Telefonica shareholders and Spanish government officials failed to come to terms.
The government in recent weeks backed Telefonica's leading shareholders, Banco Bilbao Vizcaya Argentaria and savings bank La Caixa, in pressing for Villalonga to step down, market and corporate sources told Reuters.
But Alierta is expected to slow the rapid pace that marked Villalonga's drive to create a Latin American empire and expand into other European markets, Reuters reported.
Alierta brokered a merger last year between Spanish tobacco company Tabacalera and France's Seita, but shares in the new venture Altadis have since slumped.
"In my opinion, Alierta has the opposite of the Midas touch. I'm no fan of Villalonga, but at least he boosted Telefonica's shares," one fund manager told Reuters.
Shares of Telefónica closed up  0.19, or 0.8 percent, at 23.74 in Madrid ahead of the announcement. The stock was up 1-7/16 to 66-7/8 in afternoon trading on the New York Stock Exchange Wednesday. 
-- from staff and wire reports
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Telefónica
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