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June 1, 2012 1:02 pm
In a letter to investors on Friday, KPN said América Móvil’s offer of €8 a share to raise its holding from 4.8 per cent to almost 28 per cent did not represent a high enough premium for achieving significant influence over the Dutch group.
It added that the “underlying intentions” of América Móvil, which is owned by Mexican billionaire Carlos Slim, were “unclear”.
KPN also announced a “review of strategic options” for its E-Plus subsidiary, which is Germany’s third-largest mobile provider by market share. Selling its German operation might make KPN less attractive to América Móvil or lead shareholders to wait for a potential divestment boost rather than offloading their shares.
The German mobile business is “the jewel in [KPN]’s crown,” said Frederic van Daele, analyst at Dutch brokerage Kempen & Co.
Eelco Blok, chief executive, told the Financial Times that América Móvil had refused a KPN offer to sell the company shares without voting rights in talks between the companies last month.
“They claim to have a friendly approach but the way América Móvil currently acts does not reflect that,” Mr Blok later told investors on a conference call.
He stressed, however, that KPN and America Movil were still continuing “constructive discussions on potential co-operation” in operational matters.
América Móvil, which signalled its intentions in a filing with Dutch market authorities three weeks ago, says it wants a collaborative relationship with KPN in order to gain experience in the European market, since it has exhausted its expansion opportunities in Latin America.
But analysts have speculated that the offer could be a move to gain effective control over KPN while staying under the 30 per cent threshold that would trigger a requirement for a full takeover bid under Dutch law.
KPN supported that argument in the letter to shareholders, noting that attendance at shareholder meeting averages less than 50 per cent. Mr Blok told the FT: “They know the threshold for a mandated offer is 30 per cent. It’s not a coincidence they are aiming for 27.7 per cent.”
América Móvil’s offer represents a 23.5 per cent premium over the KPN share price before the offer was announced.
KPN contends that, given the substantial influence América Móvil would gain, the premium should be in line with those paid for controlling stakes of Dutch companies in other recent takeovers, which by its count averaged 61 per cent.
KPN said the potential size of America Movil’s share might scare off third-party bidders to acquire KPN. Spain’s Telefónica has long been considered a potential suitor for KPN but its heavy debt load makes such a bid unlikely.
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