Carlos Slim’s America Movil (AMX) reportedly believes Telefonica’s €8.1bn offer for KPN’s German mobile unit E-Plus it too low.
The Financial Times cited an unnamed source familiar with the situation as saying they believe Mexico-based AMX –…
Carlos Slim’s America Movil (AMX) reportedly believes Telefonica’s €8.1bn offer for KPN’s German mobile unit E-Plus it too low.
The Financial Times cited an unnamed source familiar with the situation as saying they believe Mexico-based AMX – KPN’s largest shareholder with a stake of nearly 30% – is not opposed to the O2 offer in principle, but takes issue with the price.
The two AMX-appointed KPN directors did not vote in favour of the planned sale at a recent meeting. According to today’s report, the directors voted against the sale rather than simply abstained.
Slim held talks with Telefonica prior to the announcement of the deal earlier this week, the report stated.
Given the losses AMX has incurred on its investment in KPN, there has been considerable speculation that the Mexican telecoms giant may choose to sell its stake.
However, AMX could very well choose to do the opposite. As Bernstein analysts pointed out in a recent note to investors, AMX is entitled to terminate a standstill pact that prevents it from owning more of 30% of KPN if the Dutch telco sells assets of more than €200m. As such, AMX could potentially seize the opportunity to boost its stake in KPN.
Various analysts have said they believe valuations of the deal are too high.
Nomura analysts said in a note to investors that they estimate the premium to be paid on E-Plus, which they have valued at €5bn, amounts to €2.36bn. However, the analysts added that this seems fair in light of potential synergies.
“Overall, the premium paid appears reasonable and revenue synergies are likely to be significant if Germany is to evolve towards a disciplined three-player mobile market.”
KPN has said the €8.1bn price tag values E-Plus at 9x its FY 2013 EBITDA. The Dutch telco and O2 expect the combined O2-E-Plus entity to have annual revenues of more than €8bn and create synergies of €5-€5.5bn.
