América Móvil Maneuvers to Potentially Raise Stake in Dutch Operator KPN
BY KEVIN J. O'BRIEN
Updated, 11:28 a.m. |
The Latin American mobile phone giant América Móvil on Monday maneuvered to allow itself to increase its stake in KPN, the former Dutch mobile phone monopoly, a move that would potentially block a proposed deal with Telefónica of Spain.
América Móvil has broken off a pact, signed in February, that limited its holding in KPN to less than 30 percent, KPN said in a statement.
América Móvil took the step less than a week after KPN said it planned to sell its subsidiary E-Plus, the smallest operator in Germany, to the Spanish group Telefónica in a cash-and-stock deal worth 8.1 billion euros ($10.8 billion). A pact reached Feb. 20 between KPN and América Móvil, which is owned by the billionaire Carlos Slim Helú, gave the Mexican company the right to end the agreement if another entity bid for all of KPN or one of its major subsidiaries.
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Stefan Simons, a KPN spokesman, said the intended sale of E-Plus precipitated América Móvil’s decision to end the ‘‘standstill’’ agreement, adding that América Móvil had not told KPN whether it intended to follow through and make a bid for the Dutch operator.
América Móvil, in a one-sentence statement, said it was ending its agreement with KPN. A spokesman for América Móvil in Europe, Frank Jansen, said the Mexican company did not have anything to add at this point.
Shares of KPN, which is based in The Hague, rose 5 percent, or 10 euro cents, to 1.99 euros, in afternoon trading in Amsterdam on Monday.
América Móvil, the largest provider of mobile phone service in Latin America with 262 million subscribers in central and South America as of June 30, has received a cool reception in the Netherlands since buying its stake in KPN, which initially tried unsuccessfully a year ago to sell its German and Belgian carrier, Base, to thwart its entry.
América Móvil justified the KPN investment to its shareholders by highlighting the value of the Dutch company’s foreign holdings, including E-Plus. But the Mexican group was forced to watch as KPN’s share price slid from 8 euros at its purchase to under 2 euros this year amid slowing growth in KPN’s core markets.
Should América Móvil want to block the sale of E-Plus in Germany to Telefónica, acquiring a majority in KPN may be its only option. Although attendance at KPN shareholder meetings has averaged 40 to 50 percent of shareholders in recent years, according to Mr. Simons, the sale of the company’s E-Plus unit would likely draw a much bigger group.
That could make it difficult for América Móvil to persuade shareholders to block the sale, the proceeds of which KPN’s management has promised to partially return to shareholders in a special dividend.
Will Draper, an analyst in London at Espirito Santo, a Portuguese investment bank, said it was unclear whether América Móvil would follow through on its announcement with a formal bid for a majority stake in KPN.
Referring to the América Móvil founder, Mr. Slim, Mr. Draper said: “Mr. Slim is a law unto himself. We never understood his strategy in the first place at KPN. Now it has unraveled. The shares are down enormously. With the sale of E-Plus, the access to Germany would be gone, too.’’
(Mr. Slim owns a minority stake in The New York Times Company.)
Mr. Draper suggested that there could have been a disagreement between América Móvil, which holds two seats on KPN’s nonmanagement supervisory board, and KPN managers over the sale of E-Plus to Telefónica, which is América Móvil’s top rival in Latin America.
Eelco Blok, the KPN president and chief executive, said that the company’s supervisory board voted to support the sale of E-Plus, but he declined to say whether América Móvil’s representatives were among the supporters.
On a conference call last Friday with analysts during the presentation of its second-quarter results, the América Móvil’s chief executive, Daniel Hajj, said the company was still analyzing the proposed E-Plus sale.
That could indicate that América Móvil is planning a takeover bid for KPN, Mr. Draper said.
“If you take Mr. Slim at his word, that he is in this for the long haul, and that KPN is a foothold for América Móvil in Europe, then this is an unmissable opportunity for him to acquire KPN,’’ Mr. Draper said. “The shares of KPN are very cheap.’’