America Movil SAB de CV (NYSE:AMX) (NASDAQ:AMOV) owned by Mexican billionaire Carlos Slim has reportedly made a bid for the remaining shares of the Dutch telecoms group Koninklijke KPN N.V. (OTCMKTS:KKPNY) (AMS:KPN). America Movil’s bid of 7.2 billion euro ($9.6 billion) may jeopardize the agreement by the Dutch carrier to sell its German business to Telefonica S.A. (NYSE:TEF) (MCE:TEF), according to a report from Bloomberg.
Last month, Telefonica offered $11 billion for KPN's German business E-Plus, a move that threatened the prospects of America Movil's expensive and unprofitable investments in Europe. The telecom firms in Europe are involved in an attempt to overcome the maturing markets, struggling economy, tough regulations and expensive network upgrades, are looking to consolidate.
America Movil bid for KPN may extract a higher price for E-Plus
According to people close to the matter, America Movil SAB de CV (NYSE:AMX) (NASDAQ:AMOV) thinks the bid by Telefonica is too low for E-Plus, and, therefore, to extract a better bid from Telefonica, it made a counter offer. Also, if America Movil, wants to take full control of the KPN, it may be bad news for Telefonica, which will require E-Plus to compete against Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE) and Vodafone Group Plc (NASDAQ:VOD) (LON:VOD) in Germany.
On Friday, America Movil SAB de CV (NYSE:AMX) (NASDAQ:AMOV) revealed that it will offer 2.4 euros ($3.21) per share in cash for the remaining stake in KPN, which represents a 35 percent premium over KPN's closing price for the last 30 trading days. The offer from America Movil values KPN at about 10.2 billion euros against 8.1 billion euros inferred from Telefonica’s bid.
KPN said in a statement that it is considering the bid of America Movil and will evaluate all the options.
Challenges ahead for America Movil
America Movil SAB de CV (NYSE:AMX) (NASDAQ:AMOV) said that it has informed the KPN representatives about the offer and is looking forward to meeting the board to discuss the offer further. The official bid will be announced in September, after the Dutch financial-markets authorities approved an offer memorandum.
America Movil, which is known for its investments in emerging markets, surprised everyone with the move to Europe. According to an analyst from Sanford C. Bernstein & Co., to acquire KPN fully, America Movil may have to terminate the share buyback program, and will also require $4 billion of debt.
Also, America Movil SAB de CV (NYSE:AMX) (NASDAQ:AMOV) may have to face another challenge, apart from Telefonica, in acquiring KPN. According to KPN’s filings, an independent foundation, which has the responsibility for defending KPN “from influences that may threaten the continuity, independence and identity” of the company, may exercise an option to acquire from KPN Class B preference stock, which have voting rights.