* America Movil won't raise KPN offer - spokesman
* Foundation said would move to block America Movil bid
* KPN shares drop 3.4 percent
By Robert-Jan Bartunek and Tomas Sarmiento
BRUSSELS/MEXICO CITY, Aug 30 (Reuters) - America Movil threatened to abandon its bid for Dutch telecom KPN on Friday, saying it has no plans to raise the 7.2 billion euro ($9.5 billion) offer, after a foundation representing KPN told the Mexican firm to improve its proposal or face a veto.
The foundation, an independent group of former Dutch companies' executives tasked with protecting KPN stakeholders, bought almost 50 percent of KPN's voting stock late on Thursday, moving to block the deal.
America Movil , owned by Mexican billionaire Carlos Slim, responded testily to the foundation's move. Asked whether America Movil could increase its bid for KPN, Slim's chief spokesman, Arturo Elias, told Reuters: "No way."
"We're surprised by the opposition, since current management has stopped investing, modernizing the company, and has lost a lot of clients and market share," Elias said.
Elias also said the company was unwilling to agree to curbs on its managerial involvement in KPN's operations and will have to analyze whether to maintain its nearly 30 percent stake in the company if the takeover offer does not succeed.
The KPN foundation, which was set up when the former state monopoly was being privatized, said it had upped its voting stock to protect the interests of shareholders, employees, customers, trade unions and "Dutch society more generally," because America Movil, Latin America's biggest phone company, had not consulted with KPN before making its offer.
"The soccer rules in Mexico and the Netherlands are the same, but taking over a large company is not soccer. We may have different rules for this here than in Mexico," said Jacques Schraven, a former president of Dutch Shell, who heads the foundation.
He told a news conference on Friday that the group wanted America Movil to make a "fair" bid for KPN and to make binding arrangements with stakeholders such as KPN employees before officially launching its bid.
Slim's America Movil denied its bid - at 2.40 euros a share - would put the company's interests at risk.
"We believe we can help make (KPN) into a better company, one that grows, creates jobs, is more competitive and ultimately is strong enough to remain a major player at home and abroad," America Movil said in a statement on Friday.
America Movil shares initially rose after the market opening as investors, concerned the deal could threaten the firm's credit ratings, were cheered by the new hurdles to the acquisition, analysts said. But the stock later pared gains to trade at 12.85 pesos ($0.96) per share amid worries that there could be still room for more talks.
On Wednesday, America Movil met KPN's labour unions, saying they would stick to the company's existing strategy.
The foundation said it had been in touch with America Movil this week and called for the company to open negotiations with KPN's board and the Dutch government.
KPN shares fell 3.41 percent to close at 2.210 euros.
On average, Slim's telecoms giant paid about 3.24 euros a share for its Dutch stake, including stock bought as part of a rights issue by KPN earlier this year.
America Movil offered to buy the rest of the Dutch telecoms firm earlier this month and has since said that its financing for the bid was in place and expected it to proceed in September.
"It's clear the foundation is trying to keep KPN Dutch-owned by using this poison pill, which, in effect, has the same impact of golden shares, which are illegal," said Imari Love, an analyst with Morningstar.
Jorge Negrete, head of telecoms think-tank Mediatelecom in Mexico City, said: "This isn't about business. This seems to me to be clearly about protecting the European market."
The foundation said that in theory it could block the bid for up to two years, but that Dutch law called for any such measure to be proportional with the threat.
But, Slim's spokesman and son-in-law Elias said the company has no plans to use European courts to press their case for the KPN takeover.
Foundations such as KPN's have been used to try and gain an advantage in high-profile corporate battles, including luxury goods maker LVMH's failed hostile takeover bid for Gucci in 1999 as well as efforts by hedge funds to replace the board and break up chip equipment maker ASM International in 2008.
A number of analysts believe America Movil offered to buy the rest of KPN to squeeze more money from Slim's great rival in Latin America, Spanish company Telefonica, which wants to buy KPN's German unit, E-Plus.
If so, the move paid off. Telefonica earlier this week raised its offer by 6 percent to 8.55 billion euros and it won America Movil's support for the deal.
The E-Plus sale will provide cash that will improve KPN's balance sheet, and, though it leaves the company without direct exposure to Europe's biggest mobile market, it makes America Movil's 2.40 euros-per-share offer less attractive, analysts said.
In a research note written before the KPN foundation's announcement, analysts at Sanford Bernstein said: "We think that KPN could be worth as much as 3 euros per share."