Carlos Slim’s America Movil (AMX) has abandoned its intended €7.2bn (US$9.6bn) takeover bid for KPN, saying the foundation that is now the Dutch telco’s largest shareholder has made it “impossible”.
AMX has formally withdrawn its €2.40 per…
Carlos Slim’s America Movil (AMX) has abandoned its intended €7.2bn (US$9.6bn) takeover bid for KPN, saying the foundation that is now the Dutch telco’s largest shareholder has made it “impossible”.
AMX has formally withdrawn its €2.40 per share intended takeover bid, after KPN said that discussions “have not led to an agreement which could be recommended by the KPN board to its shareholders”.
KPN contended that AMX has not shown any willingness to improve its intended offer for the then-70% stake it did not already own, announced in August. The Dutch telco said it has always been clear that its board believes the offer is insufficient.
“In addition, the KPN boards were not able during their numerous discussions to obtain an acceptable proposal on the content, firmness, duration and enforceability of America Movil’s commitments to KPN stakeholders, including shareholders, employees, customers, trade unions and Dutch society more generally,” the company said.
In its own statement, AMX said the independent foundation charged with protecting KPN and its stakeholders, has made its intended offer “not viable”. The foundation exercised a poison pill in late August to block the offer, giving it a 50% minus one voting interest in KPN. As such, AMX saw its nearly-30% stake reduced by half.
“In view thereof, AMX will not launch the intended offer and will not make the offer memorandum approved by the AFM [Dutch financial markets authority] publically available …,” the Mexico-based telco said.
Reuters quoted a foundation spokesperson as saying the group did not intend to block the deal, but rather to get the two parties to negotiate a suitable merger protocol.
AMX also contended that discussions with the KPN boards about reaching an agreement that would see it take an active role in the Dutch telco’s management, strategic direction and other matters had proved fruitless.
“AMX has not received comments on such proposals from KPN, who made any subsequent discussions contingent upon an increase of the offer price under the intended offer.”
The Mexican company has not yet decided whether or not to keep its current stake in KPN, Reuters quoted Carlos Slim’s spokesperson and son-in-law Arturo Elias as saying.
Meanwhile, CEO Eelco Blok told reporters on a subsequent conference call that “there is a possibility” KPN and AMX will resume talks. He declined to say what KPN considers to be a fair offer price.
Deal could still happen
Analysts have questioned AMX’s strategy, asking where the Mexican telco, seeking to expand in Europe, will go from here. Some have also suggested that it could still strike a deal with KPN.
Nomura analysts said in an investor note that “today’s statement could put sufficient pressure on the foundation and KPN’s board to push the board to agree to negotiations with no price increase, to reach a recommended offer by the board and subsequently get the foundation to redeem its shares.”
They also noted that AMX is likely to retain its current shareholding for now as it would have to bear a significant loss on its investment if it exits immediately.
Bernstein analysts said in their own note that AMX is chiefly to blame for the failed takeover bid, adding its reputation in Europe will be “further sullied” by it.
“AMX’s bid(s) for KPN started out badly and have progressively got worse as a combination of factors – terrible execution, opportunism and then stubbornness on price, and last and probably least, other demands on AMX’s balance sheet – intervened.”
In their view, AMX’s withdrawal of its intended offer is good news for KPN shareholders as its shows the company is able to defend itself against what they term an “opportunistically low bid”.
