AMSTERDAM (Reuters) - An independent foundation which has the power to block a takeover of Dutch telecoms group KPN has expressed its concern over the proposed 7.2 billion euros ($9.6 billion) offer by Mexican billionaire Carlos Slim’s America Movil.
America Movil (AMX) said on Friday it would make a public offer for the 70 percent of KPN that it does not already own. The proposed bid poses a challenge to its arch-rival, Spain’s Telefonica, which made an $11 billion offer last month to buy KPN’s crown jewel, German E-Plus.
Management, however, has shown little enthusiasm for Slim’s involvement since he built up an almost 30 percent stake last year and the foundation’s worries could be the first signs of clear opposition from one of the involved parties.
Foundations, a common and independent element in many Dutch companies, can block hostile takeovers in the Netherlands.
“There is considerable uncertainty about América Móvil’s intentions,” the foundation said late on Tuesday, citing AMX’s brief announcement that it intends to make an offer and the lack of information about its position on KPN, “including KPN’s intention to sell its German subsidiary E-Plus.”
Typically in such a scenario, a foundation would exercise a call option, triggering a huge issue of preference shares from the target company and diluting the holding of an unwelcome or hostile bidder.
The foundation said it was set up “to represent the interests of KPN, its associated entities and its stakeholders, in part by protecting KPN as much as possible from influences that might threaten the continuity, independence or identity of KPN entities.”
KPN said on Friday it had noted AMX’s intended offer and was considering it, but management at the Dutch telecoms group advised its shareholders not to accept when Slim made his initial approach last year.
“The KPN board have not yet indicated whether or not they support the suggested offer,” credit rating agency Fitch said on Friday, pointing to the Foundation’s power through its call option to acquire preference shares.
“While Fitch has no knowledge of the foundation’s view of the transaction, if such a move was used, it is likely to at least delay AMX gaining full control of KPN,” Fitch said.
Carlos García Moreno, America Movil’s chief financial officer, this week told Dutch media that the Mexican group wants to “unlock value” at KPN and is not just interested in E-Plus.
KPN has been struggling to reverse a decline in revenues and profit in the face of stiff competition at home, where it still has a market share of about 45 percent in fixed-line and mobile telephony.
The firm, which also has operations in Belgium, was slow to respond as consumers switched to free or cheaper ways of sending mobile phone messages, according to analysts.
Reporting by Sara Webb; editing by Patrick Graham