Analysis: Carlos Slim's Dutch woes test appetite for European expansion

Fri Aug 30, 2013 5:07pm EDT
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By Elinor Comlay and Tomas Sarmiento

MEXICO CITY (Reuters) - Billionaire Mexican businessman Carlos Slim is facing an unfamiliar challenge as he seeks to steer his flagship phone company America Movil into Europe - dissent.

A surprise move by a Dutch foundation to block America Movil's 7.2 billion euros ($9.49 billion) offer for the 70 percent of Dutch group KPN it does not own could force Slim to retreat and risk heavy losses if he sells his investment.

In the short term, walking away from KPN might not be unpopular with shareholders who have already lost some faith in an expansion effort that has handed America Movil (AMXL.MX: Quote) (AMX.N: Quote) some $2 billion in paper losses related to KPN (KPN.AS: Quote).

America Movil shares climbed more than 1 percent on Friday after a Slim spokesman said the firm had no intention of raising its offer for the Dutch company following pressure from the KPN foundation that the bid be sweetened.

"We are certainly not prepared to negotiate on price, we are also not prepared to negotiate an arrangement where management puts any restrictions on us," Slim's son-in-law and key spokesman Arturo Elias said in an interview with Reuters.

Asked whether the company would retain its almost 30 percent stake if its bid for the rest of KPN fails, Elias said: "That is something we also will have to carefully analyze."

However, if tycoon Slim did abandon his investment in KPN, it would cast doubt over the company's stated strategy of seeking expansion opportunities beyond Latin America, where regulators are increasingly squeezing America Movil's profit.

"It would mean (the) plan to diversify had failed and would be a sign that outside Latin America, Mr. Slim's negotiating skills are less deft," Sanford C Bernstein analyst Robin Bienenstock wrote before America Movil ruled out a higher offer.   Continued...

Mexican billionaire Carlos Slim looks on before he gives a speech at Mexico's school of engineers during an event to mark the 50th anniversary of his engineering degree, in Mexico City May 28, 2013. REUTERS/Henry Romero