The takeover frenzy in Europe’s telecoms industry has taken a fresh twist as the Mexican billionaire Carlos Slim has launched a €7.2bn (£6.2bn) bid to take full control of the Dutch telecoms group KPN.
The move by Mr Slim’s America Movil threatens to undermine its Spanish rival Telefonica, the owner of the mobile network O2, which made a takeover bid for KPN’s key German division, E-Plus, last month.
America Movil already owns 30 per cent of KPN and it is thought Mr Slim feels that Telefonica’s move undervalues E-Plus and thus the wider Dutch group.
His €2.4-per-share cash offer for the rest of KPN was at a premium of about 35 per cent over the average closing price of KPN’s shares for the past 30 days. KPN shares soared 16 per cent to €2.32, valuing the Dutch-listed company at €10.2bn.
Telefonica’s bid for KPN subsidiary E-Plus alone was worth €8.1bn. But some investors may think it is less attractive because it involves a mixture of cash and stock and is structured in a more complex way, with KPN set to retain a stake in the German division.
Will Draper, an analyst at Espirito Santo bank in London, said “there is a significant risk” that America Movil’s action will block Telefonica’s deal.
Mr Slim has topped the Forbes “Rich List” for the past four years and has an estimated $70bn (£45bn) fortune. But the magazine claimed he has dropped to second place behind Microsoft’s founder Bill Gates in recent months, because some of Mr Slim’s shareholdings have fallen in value.
America Movil is sitting on a loss on its existing stake in KPN after paying €8 per share last May when it began building a stake.
His move to buy all of KPN has surprised some observers because such a big outlay could reduce his ability to do deals elsewhere and he has been keener on buying into emerging markets.
However, America Movil does have other interests in Europe, including a stake in Telekom Austria, and it recently took an estimated 10 per cent stake in the British music mobile app firm Shazam for $25m.
America Movil pointed out that KPN was “its first investment outside of the Americas” and it wanted to take full control now to increase its geographic spread and improve operations and efficiency.
Mr Slim’s company said it has already met KPN representatives and urged the Dutch firm’s supervisory and management boards to meet “as soon as possible”. KPN said it was considering America Movil’s offer and would look at all options.
The battle between America Movil and Telefonica over KPN is just part of a wave of consolidation across European telecoms. The American giant Liberty Global spent £15bn to buy the British broadband and pay-TV operator Virgin Media in February and Britain’s Vodafone paid £6.6bn for German broadband and pay-TV operator Kabel Deutschland in June.
All the big telecoms companies have been looking at consolidation because of the prolonged economic downturn and regulation pushing down on prices. Consumers are also increasingly turning to a single provider for all their mobile, home phone, broadband and pay-TV services, dubbed a triple play or quad play.
There was speculation in some quarters that Mr Slim may have intervened in the KPN deal in an effort to force Telefonica to sweeten its offer, according to “people close to the matter” who spoke to news agency Reuters.
When Vodafone first made its move for Kabel Deutschland in June, Liberty Global made a rival approach which failed, but it is thought Vodafone had to improve its offer.