* 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 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
"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
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
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
"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
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
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
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."