Telefónica, Spanish telecommunications group, plans to buy out minority shareholders in its separately listed mobile telephony unit, in the latest move to simplify its corporate structure and cut costs.

The company is to swap shares in the parent company for the 7.5 per cent of Telefónica Móviles it does not already own, at a rate of four for five.

In a regulatory filing, it said it would formally propose the deal at board meetings at both companies scheduled for late this month.

 The offer, worth about €3.5bn ($4.2bn), valued the subsidiary’s shares at about €10.50 at Thursday’s market close, compared with an average price of €9.90 over the past month.

Investors on Thursday drove the shares as high as €11.50 on hopes of a higher offer from the parent.

Analysts have not discounted legal action on behalf of shareholders to force the company to improve the terms, perhaps with a cash sweetener.

Shares in Telefónica Móviles were floated at €11.50 in November 2000, as the collapse in internet-related shares was forcing media and telecommunications companies to rethink their convergence strategies.

Last year Telefónica bought out some minorities in Terra, its internet service provider, after earlier divesting Lycos.com, its loss-making US portal. Telefónica said recently it might sell TPI, its telephone directories business.

The company is also studying the future of Endemol, its television production unit, after placing about 22 per cent of the equity with institutional investors late last year.

The sale or integration of non-core interests has coincided with aggressive expansion by Telefónica in its main business areas.