The Austrian government and Carlos Slim’s America Movil (AMX) have finalised a syndicate agreement that will see the Mexican telco move to take control of Telekom Austria (TA).
The supervisory board of state holding OeIAG, the Austrian incumbent’s…
The Austrian government and Carlos Slim’s America Movil (AMX) have finalised a syndicate agreement that will see the Mexican telco move to take control of Telekom Austria (TA).
The supervisory board of state holding OeIAG, the Austrian incumbent’s largest shareholder, approved the formation of the pact late yesterday, just hours before deadline.
OeIAG’s board was unable to vote on the issue for most of yesterday after labour representatives boycotted the meeting, meaning a required majority of board members was not present initially.
According to local reports, the board’s chair, Gerhard Mitterbauer, was flown in from Israel late yesterday to ensure a majority was able to vote on the shareholder pact.
Failure to approve the pact, which combines the parties’ stakes in Telekom Austria, before midnight, would have blocked a syndicate agreement for another year under local takeover rules.
Subject to the approval of Austrian regulators, the agreement runs for 10 years with an optional five year extension. AMX will take on operational responsibilities at TA once the approvals are granted.
AMX to offer €7.15 per outstanding share
As part of the agreement, OeIAG and America Movil, which have 28.4% and 26.4% stakes in TA respectively, have agreed to support a €1bn (US$1.38bn) capital increase at the Vienna-based telco.
As required under Austrian takeover law, AMX, via Amsterdam-based subsidiary Carso Telecom, will launch a public takeover offer for all outstanding shares. AMX will offer €7.15 per share, valuing the takeover offer at more than €1.4bn. The offer document is expected to be published in the coming weeks.
TA CEO Hannes Ametsreiter described the development as “a new chapter in the company’s history”.
“We are very pleased about the clear commitment of both core shareholders to Telekom Austria Group, which they have sealed with today’s agreement,” he said.
“First and foremost, this means continuity as both shareholders have agreed on long-term cooperation.”
Growth opportunities in CEE
AMX CEO Daniel Hajj described talks with OeIAG as intense, but constructive and professional.
“This agreement provides the basis for future growth, continued innovation, and solid investment in TA,” he said.
“It will strengthen the capital structure of TA, maintain a state of the art infrastructure in a very dynamic and competitive sector, and support job development and creation.”
Hajj added that the deal will also better position TA as a more relevant player in the European telecoms sector, enabling it to take advantage of growth opportunities in the region.
In its statement, AMX said the capital hike will well place the company to “benefit from investment opportunities arising in the countries in which it currently operates and in emerging markets in Central and Eastern Europe.”
Nomura analysts commented that the relatively low premium offered by AMX – 6% on the average share price for the year to date – is a sign it wants to secure control of TA without taking full control. Nomura also referred to the so-called ‘Austrian package’ that forms part of the agreement, which ensures OeIAG maintains at least 25% plus one share in TA and nominates its chairman and CEO. IT also ensures the telco’s headquarters remain in Austria and listed on the Vienna Stock Exchange.
The analysts expect AMX to pay a maximum cash consideration of €2.1bn, assuming full acceptance of the €1.4bn tender offer and a 71.6% subscription to the TA capital increase (€716m).
They described the chances of AMX making a renewed bid for control of its other European asset, Dutch telco KPN, as “limited” at present, although they don’t rule it out long term.
“In our view, this transaction shows AMX’s commitment to Europe and indicates that this could be the way forward with KPN as well in the long run, therefore we would not rule out a renewed attempt by AMX to take on KPN at a later stage, albeit this time with the backing of the board.”
