Mexican telco America Movil (AMX) has said it is prepared to pull out of its €7.2bn bid to acquire Dutch incumbent KPN after a foundation charged with protecting the target and its stakeholders moved to block the takeover.
The Foundation Preference…
Mexican telco America Movil (AMX) has said it is prepared to pull out of its €7.2bn bid to acquire Dutch incumbent KPN after a foundation charged with protecting the target and its stakeholders moved to block the takeover.
The Foundation Preference Shares B KPN said late yesterday that it had exercised its call option, written into the company’s statutes, to safeguard the interests of KPN and its stakeholders in light of AMX’s takeover approach.
The foundation now holds preference shares representing 50% minus one vote of all outstanding shares in KPN.
In a press conference this morning it reportedly called on AMX to make a “fair bid”.
The statute allowed the five-man foundation to purchase preference shares, which give it almost 50% of KPN voting rights. This poison pill effectively blocks the Mexican group’s attempt to buy the business.
The foundation added that it supported the €8.55bn sale of KPN’s German operator E-Plus to Telefonica.
In a strongly worded reply AMX said that it remained committed to its €2.40 per share offer for the Dutch incumbent, but was prepared to walk away if the foundation maintained its stance.
In a memo Bernstein Research senior analyst Robin Bienenstock said: “To understand what could happen next it is important to understand what AMX and the foundation (read Dutch government and corporate society) want out of this deal.”
“We think that Dutch stakeholders want assurances on investment and employment levels, balance sheet issues, and potential acquisitions, and also a higher price and formal protection for minorities.”
At the start of the week AMX said it “intends to respect the identity of KPN” and would retain KPN headquarters in The Hague, continue to operate under the KPN brand and to finance expansion plans. This was seen as an attempt to address the foundation’s concerns.
Earlier this month the foundation, set up when the Dutch government first privatised the incumbent, had said there was “considerable uncertainty about America Movil’s intentions in light of its only briefly clarified announcement of its intention to make a public offer for the shares in KPN it does not already own”.
In the Netherlands, foundations of this type have the power to block takeovers, generally by exercising a call option. This sees the target company issue a large number of preference shares, thereby diluting the holding of the unwanted bidder.