Royal KPN N.V. (KPN: Quote,KKPNY.PK, KKPNF.PK) on Friday urged its shareholders to not take any action on the unsolicited partial offer from Mexican billionaire Carlos Slim's América Móvil (AMX: Quote,AMOV: Quote), terming its timing as opportunistic. The Dutch telecommunications operator also said it is exploring strategic options for its German business, E-Plus.
KPN's CEO Eelco Blok said, "América Móvil is not willing to enter into a shareholder agreement and also did not respond positively to our proposals -- We are convinced América Móvil is not offering a fair premium for gaining significant influence over KPN."
KPN has been going through hard times amid difficult market conditions in the Netherlands. In December 2011, the firm agreed to sell its French mobile unit KPN France to Bouygues Telecom, and in April, it said it is exploring strategic options for its mobile activities in Belgium. The firm has also initiated a Dutch cost reduction program that is expected to end by next year-end.
It was against this background that the Mexican telecommunications company announced on May 8 an offer of 8 euros per share in cash and stock for a 28 percent stake in KPN. The offer price represented a premium of about 23.5 percent to KPN's closing stock price on May 7.
On May 29, América Móvil launched this offer, stating it would acquire up to 325 million shares and thus boost its stake in KPN to 393.28 million shares. The Mexican firm already owns 4.8 percent of the Dutch firm.
KPN believes that América Móvil's offer is too low for gaining significant influence over KPN and substantially undervalues the company on a standalone basis.
The firm's board thinks the benefits from KPN's current transition of its domestic businesses as well as the continued profitable growth in Germany and Belgium are not reflected in the partial offer, which makes its timing opportunistic.
"América Móvil is not offering a premium on all outstanding ordinary KPN shares for gaining significant influence," KPN said.
KPN noted that by targeting only a 27.7 percent stake, América Móvil deliberately remains below the 30 percent mandatory public offer threshold. This will avoid the requirement to make an offer for all outstanding KPN shares, potentially deterring other third parties from making an offer for the whole company in future.
The company also reconfirmed its 2012 guidance of EBITDA, excluding restructuring costs, of between 4.7 billion and 4.9 billion euros and free cash flow of between 1.6 billion and 1.8 billion euros.
The stock is currently up 0.2 percent in Amsterdam at 7.66 euros.
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by RTT Staff Writer
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