Acquisition deals are falling apart all over Europe. No sooner had Vodafone completed its takeover of German cableco KDG, than rival cable giant Liberty Global was rebuffed in its bid to acquire Dutch provider Ziggo, a move that was part of a broader plan to create a bigger European footprint. Meanwhile, another operator with designs on European expansion, America Movil of Mexico, withdrew its own €7.2bn ($9.74bn) offer for another Dutch firm, incumbent telco KPN.
America Movil backed away from KPN, saying it had essentially been blocked by the company’s foundation from achieving its goal of gaining a controlling stake. The independent KPN Foundation, set up to protect shareholders’ interests, had temporarily increased its shareholding to just under 50% in order to fend off the takeover, or at least force a higher price, by invoking a protective measure. That reduced Movil’s voting equity to 15%, even though it holds about 30% of the company.
The setback will be a blow to Movil chairman Carlos Slim, who has spoken of plans to take advantage of low valuations in recession-hit Europe to expand beyond his Latin American heartland. His firm also owns about 24% of Telekom Austria.
In its statement, the Mexican giant said it had been in touch with KPN’s management on proposals it made to address issues related to strategic direction, employment, national security and social policies, as well as minority shareholder protection at KPN, but did not receive a response. KPN then ‘made any subsequent discussions contingent upon an increase of the offer price under the intended offer’.
The telco told Bloomberg it had still been studying Movil’s proposals and the Foundation had not blocked the deal, but its would-be parent hit out, saying: ‘The actions taken by the Foundation are detrimental not only to all KPN shareholders, including those who wished to participate in the intended offer, but also detrimental to clients, employees and other stakeholders of KPN who envisioned being part of a solid company with long term vision.’
Earlier this month KPN shareholders approved the €8.55bn ($11.56bn) sale of its German subsidiary, E-Plus, to Telef’nica. Movil had helped it to negotiate an improved offer from the Spanish group, from the original bid of €8.1bn. Recent reports said KPN had then asked for a better price from Movil but was refused. The Dutch firm confirmed it was not happy with the price and failed to obtain an acceptable proposal on the ‘content, firmness, duration and enforceability’ of Movil’s commitments on other stakeholder interests. Movil may now seek other targets, or perhaps full control of Telekom Austria.
Meanwhile, Liberty Global failed to buy KDG from under Vodafone’s nose in Germany, and has now suffered another setback. It had planned to purchase Ziggo, and combine it with its existing cable holdings in Holland (UPC) and Belgium (Telenet). Such deals will be important to help Liberty expand its broadband and TV reach in Europe, achieving economies of scale, building up wireless options based around Wi-Fi hotspots and homespots, and competing with Vodafone’s expanding ventures in wireline and quad play services.
Ziggo said Liberty’s proposal was ‘inadequate’. Liberty acquired a 28.5% stake in Ziggo earlier this year. It could still return with an improved offer, but many analysts think this is unlikely, though Ziggo shares leapt by 11% on hopes of an upgraded bid. According to filings with the Dutch securities regulator AFM, several large investors have been building stakes in Ziggo in recent months, including BNP Paribas Investment Partners and Ameriprise Financial.