América Móvil said it withdrew its €7.2 billion ($9.74 billion) bid to buy Dutch operator KPN because it determined it would be impossible to meet its goal of expanding its stake to more than 50 per cent. The Mexican telecoms giant said the Dutch telecom's foundation had essentially blocked its bid to do so.
"In view thereof, AMX will not launch the intended offer and will not make the offer memorandum," América Móvil said in a statement. The company said Dutch regulators have approved the €2.40 per share buyout offer. The KPN foundation had increased its stake to just under 50 per cent of the operator and was therefore able to block any potential takeovers.
The decision is a major blow to América Móvil's Carlos Slim, who has made it a priority to expand the company's reach beyond its traditional base in Latin America into Europe. América Móvil has accumulated around 30 per cent of KPN's stock and also holds around 24 per cent of Telekom Austria.
In its statement, América Móvil said it had been in touch with KPN's management on proposals it made to address concerns about strategic direction, employment, national security, social policies and social plans, and minority shareholder protection at KPN, but did not receive comments on its proposals. The company said KPN "made any subsequent discussions contingent upon an increase of the offer price under the intended offer."
According to the Wall Street Journal, KPN said it has received the América Móvil statement and is studying it. The foundation only tried to facilitate the negotiations and didn't block the deal, Walter Samuels, a spokesman for the independent group, told Bloomberg.
"The actions taken by the foundation are detrimental not only to all KPN shareholders--including those who wished to participate in the intended offer--but also detrimental to clients, employees and other stakeholders of KPN who envisioned being part of a solid company with long-term vision," América Móvil said.
Earlier this month KPN shareholders approved the €8.55 billion ($11.56 billion) sale of its German unit, E-Plus, to Telefónica Deutschland, paving the way for KPN to resume paying dividends for 2014 and sharpen its investment focus on Belgium and the Netherlands. América Móvil had helped KPN negotiate a better price from Telefónica, which boosted its offer for E-Plus from €8.1 billion.
Recent reports have indicated KPN was now demanding an increase América Móvil's offer price because it recently agreed to a €3.7 billion ($5 billion) loss on the sale of E-Plus to cut tax. Negotiations were also hampered by the surprise resignation recently of KPN CFO Eric Hageman.
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article
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