KPN shares tumble after Slim gains 21% stake

Fears that Mexican tycoon Carlos Slim might withdraw his €8 per share offer for KPN's shares has pushed them to a six-week low. The drop came after Slim's telecom group América Móvil revealed it had spent €1.27 billion to increase holding in KPN from 8.7 per cent to 21 per cent late last week.

The belief that América Móvil might pull its offer for KPN's shares could be a ploy by the Mexican telco to unsettle the market and then return to buying them at a lower price, according to stock market insiders.

"It would not surprise me if he cancels his bid. That's why there's an exodus of KPN investors," asset manager Ed Manie of Dutch brokerage and fund management firm Keijser Capital told Reuters, adding his firm had sold all its KPN shares.

"The stake he [Slim] bought on Thursday is a sledgehammer blow to KPN. He can still buy a further 7 per cent on the market," Manie said, which would move Slim toward his stated target of a maximum 27.7 per cent.

KPN shareholders could also see some of their share offered to América Móvil rejected, because the Mexican company would only partially buy up share if the amount tendered exceeded what it needed, analyst Jos Versteeg at private bank Theodoor Gilissen told Dutch TV programme RTL-Z, according to Reuters.

While Slim will probably keep his KPN holding below 30 per cent to avoid being forced by Dutch law into making a bid for all of KPN, his influence within the company could trigger marked change.

"The way he runs his companies in South America is quick and dirty and shaking things up. Spoilt KPN investors who received a good dividend and share buybacks will see this come to an end," Manie said.

Commenting on its increased shareholding, América Móvil said it looked forward to a long-term partnership with KPN and was ready to begin working with its executives.

América Móvil CFO Carlos Garcia-Moreno told Bloomberg that KPN had gone through some issues that the Mexican-based operator will likely have to confront in Latin America as the market there matures. "For us it's important to exchange experiences," he said.

Garcia-Moreno added that KPN and Telekom Austria (where América Móvil now has a 28 per cent holding) will get access to handsets and infrastructure equipment at lower prices because of América Móvil's purchasing power.

For more:
- see this Reuters article
- see this Bloomberg article
- see the New York Times article

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