Dutch telco KPN’s attempts to spin off its German unit E-Plus have failed – a significant blow to its campaign to thwart America Movil’s (AMX) unsolicited tender offer.
KPN conceded its attempts to “unlock superior value” for company…
Dutch telco KPN’s attempts to spin off its German unit E-Plus have failed – a significant blow to its campaign to thwart America Movil’s (AMX) unsolicited tender offer.
KPN conceded its attempts to “unlock superior value” for company shareholders via in-market consolidation in Germany have proved futile.
“[T]he current adverse conditions in financial markets have meant that no agreement could be reached at this point in time and talks have been terminated,” the company said in a statement.
While KPN did not say who it had been talking to, it is widely speculated to have been Spanish telecoms group Telefonica, which operates under the 02 brand in Germany.
On 1 June, KPN had urged shareholders not to accept AMX’s €8 per share offer to boost its stake in the group to 27.7%, arguing that it undervalued the company. The Dutch telco announced at the time that it was considering strategic options for E-Plus as part of its efforts to unlock the company’s true value.
Trying to buy time?
Bernstein Research analysts speculated that KPN’s most recent statement may be an attempt to convince its shareholder Stichting Preferente Aandelen B KPN to exercise a call option for KPN class B preference shares, which would give it effective voting control and enable it to hold up AMX’s tender offer.
Stichting Preferente Aandelen B KPN is a foundation which, according to KPN’s 2011 annual report, has the statutory goal to “protect KPN’s interests […] by, amongst others, protecting KPN from influences that may threaten the continuity, independence and identity.” The annual report specifically mentions that “the Board of the Foundation may decide to exercise the call option […] with a view to enabling the Company to determine its position in relation to the circumstances as referred to above, and seek alternatives.”
Bernstein said in a note to investors: “We think KPN is laying the groundwork to make a case to [the foundation] to temporarily exercise their voting shares such that KPN and the suitor for its German business (presumably Telefonica) can be given more time to pursue a deal”.
It appears KPN has not yet given up on unlocking what it believes to be the true value of its German unit. In its most recent statement, the company said: “Today, KPN has an even stronger belief that there is significant value embedded in the German market and is convinced that other parties share this view.”
Meanwhile, AMX said yesterday (20 June) that it has acquired an extra 3.85 million ordinary KPN shares in the latest in a series of transactions outside regular market trading, taking its total stake to 8.7%.
