KPN still in talks with AM over potential EUR7.2bn bid

9 Oct 2013

Mexican billionaire Carlos Slim appears intent on securing a bridgehead in Europe, with the announcement that his LatAm telecommunications giant America Movil (AM) is still engaged in talks with Dutch former monopoly KPN Telecom (also known as Royal KPN) about a potential takeover bid worth EUR7.2 (USD9.6 billion). The news that both sides are still in negotiations comes despite rumours in late-August that AM was considering abandoning its offer for the Netherlands-based group after an independent foundation committed to the protection of KPN shareholders’ interests, stepped in to block him. The Mexican group owned nearly 30% of KPN until the foundation exercised an option to give itself about 50% of voting stock in August this year, effectively halving AM’s holding. Then in September, the plan received a further setback, with the news that the Dutch government had issued a warning about the proposed buyout. The Dutch Minister of Economic Affairs, Henk Kamp, warned that the acquisition of the Dutch incumbent by a ‘foreign company’ had consequences for national security, further muddying the water. In a letter to the Dutch parliament, the minister said the government will seek to secure ‘additional binding agreements’ to ensure that the public’s interests – relating to KPN’s infrastructure – are protected in any deal. ‘Due to before mentioned interests the cabinet is actively involved and making an effort for extra protection of the public interest through additional binding agreements,’ the minister said.

At the start of this month it was reported that any potential deal had hit yet another obstacle, with both sides unable to agree on price. The Dutch carrier’s management is reportedly holding out for a higher offer, according to people with knowledge of the discussions. While KPN is looking for Slim to up its initial EUR2.40 per share offer – arguing that a tax gain linked to its sale of E-Plus in Germany makes the firm ‘more valuable’ – AM has countered that the arrival of Ziggo in the domestic mobile market in the Netherlands is evidence of KPN’s ‘deteriorating prospects’ going forward – and hence justifies its valuation.

Netherlands, America Movil (AM), KPN