Dutch phone business rejects €8 a share offer

AMERICA MOVIL, which is bidding for a bigger stake in Royal KPN, has said the investment will boost profit, helped by the Dutch phone company’s exposure to Germany and the Netherlands.

America Movil, owned by Carlos Slim, has no interest in bidding directly for KPN’s German E-Plus mobile-phone unit and regards the Dutch company’s turnaround plan as credible, America Movil chief financial officer Carlos Garcia- Moreno said at a meeting in London yesterday, according to a Bank of America Merrill Lynch note to clients.

The planned KPN deal may increase America Movil’s net income by 5 per cent before synergies, Bank of America Merrill Lynch said, without specifying a time period. KPN is an attractive investment as it operates in “solid” countries such as Germany and the Netherlands, which are less affected by the European debt crisis.

Representatives for America Movil and Bank of America Merrill Lynch have declined to comment.

America Movil, based in Mexico City and owned by Mr Slim, the world’s richest man, this month offered €2.6 billion to boost its 4.8 per cent stake in the former Dutch telecommunications monopoly to as much as 28 per cent. KPN, based in The Hague, said the unsolicited €8 a share cash offer was too low and hired Goldman Sachs and JPMorgan Chase to evaluate options.

While the deal was “sufficiently meaningful”, it was not large enough to affect or distract America Movil from its Latin-American business, Mr Moreno told investors. America Movil will be able to retain its current credit rating, he is quoted as saying.

America Movil is in no rush to reach 28 per cent and is happy to accept the stake it gets in the tender, according to Bank of America Merrill Lynch.

KPN shares declined yesterday afternoon by 0.7 per cent to €7.58, valuing the company at €10.8 billion. The stock has not closed above €8 since April 3rd.

Mr Slim is taking advantage of Europe’s debt crisis to find bargains, fulfilling a plan to expand beyond his Latin-American phone empire. The KPN offer follows failed attempts in the past decade to enter Spain and Italy; America Movil also considered purchases in the past 18 months in Poland and Serbia. – (Bloomberg)