Carlos Slim’s Mexico-based vehicle America Movil has stepped up its ambitions to establish itself as a European player, challenging Telefonica, its arch-rival in Latin America, on its home territory.
The Mexican firm has already taken stakes in KPN of the Netherlands and Telekom Austria, and has now mounted a bid to acquire the 70% of the Dutch incumbent it does not already own. Although Europe suffers from recession and mobile saturation, it currently offers some bargains to predators, and would allow America Movil to build new revenue streams as the potential to increase market share in Latin America, where it dominates in many markets, reduces over time.
It is offering €7.2bn ($9.6bn) for the remaining 70% of KPN, after ending a shareholder truce earlier this month, which had prevented it from increasing its stake in the Dutch firm. Its offer represents a premium of about 35% over the closing price over the 30 days before the bid was made. KPN’s price leapt to €2.35 on the news, just below the bid price.
The offer is subject to America Movil securing at least 50% of the shares in the company, which would give it management control of the firm. KPN said that it was informed in advance and would ‘carefully consider’ the offer.
The negotiations may be complicated by KPN’s recent decision to sell its German subsidiary E-Plus to Telefonica, and Movil has not decided whether to support that plan as yet but is understood to feel that the German asset is being undervalued. It may also be keen to hang on to E-Plus to give it a foothold in Europe’s largest market, and to prevent rival Telefonica increasing its power there.
Robin Bienenstock, an analyst at Bernstein, told the Financial Times that the bid for KPN could prompt a counter-bid from Telefonica to protect the German deal, though this has not materialized and would likely go down badly with shareholders, keen to see the Spanish group pay down its debt.
America Movil also owns a large stake in Telekom Austria, and had been rumored to be interested in buying UK based EE. And its two holdings are collaborating on fiber too ‘ KPN and Telekom Austria recently announced a a partnership that covers the interconnection of Ethernet, IP VPN, wavelength and IPT services to maximize capabilities for heavy traffic and increase the presence in Europe. The hub will be established in Frankfurt with a back-up in Vienna. The IP backbone will connect, among many other,s the four most important Internet Exchange Points in Europe (Frankfurt, London, Amsterdam and Paris) and a total of 173 PoPs within 35 countries across Europe and North America.