KPN Foundation Moves to Impede America Movil Takeover

Royal KPN NV (KPN)’s independent foundation moved to impede America Movil SAB from what it described as a hostile takeover of the Dutch phone carrier, saying it seeks a more ordered process.

The group said yesterday it exercised an option to acquire preferred KPN shares, giving it almost 50 percent of issued and voting stock, almost enough to entirely block America Movil’s offer for majority control.

The foundation said it will only hold the shares temporarily, leaving the door open for America Movil to address its concerns. The Latin American wireless company, controlled by billionaire Carlos Slim, is offering 2.40 euros a share to boost its stake of about 30 percent in KPN to more than 50 percent.

“We want clarity and structure,” said Walter Samuels, a foundation spokesman. “We need an orderly process which will lead to a merger protocol, an offer document and just follow the procedures.”

An America Movil press official declined to comment. Stefan Simons, a KPN spokesman, wasn’t immediately available for comment.

America Movil is seeking control of the Dutch company as a way to enter the European market, expanding beyond the Western hemisphere. The carrier also holds a stake of about 24 percent in Telekom Austria AG. (TKA)

“Negotiations for AMX are getting tougher,” Gregorio Tomassi, an analyst at Banco Itau BBA in Mexico City, said yesterday in a research note, referring to America Movil’s ticker symbol. “The KPN foundation is forcing AMX to sit and negotiate on demands that are not yet clear.”

Setting Conditions

The foundation may be aiming to firm up conditions such as employee compensation, bonus packages and management continuity before agreeing to let the offer proceed, said Tomassi, who has the equivalent of a hold rating on America Movil.

Shares of America Movil fell less than 1 percent to 12.81 pesos yesterday in Mexico City, where the company is based. The Hague-based KPN dropped less than 1 percent to 2.29 euros in Amsterdam before the foundation’s announcement.

The foundation’s move came just after America Movil appeared to be addressing the group’s concerns. Slim’s company agreed this week to endorse the sale of KPN’s German unit to the billionaire’s biggest Latin American rival, Telefonica SA (TEF) -- even convincing the Spanish company to sweeten its bid for the asset. After negotiating with America Movil, Telefonica increased the value of the bid for the KPN unit to 8.55 billion euros from 8.1 billion euros.

Germany Commitment

America Movil committed to vote in favor of the German deal after the foundation urged the company to make clear its position on the transaction. Now the foundation is asking America Movil to file documents that clarify how it calculated its offer. It also seeks information on commitments America Movil is making on technology, employment, strategy and governance, it said.

“The foundation believes that America Movil has knowingly opted for a hostile approach by not first trying to reach agreement on a merger protocol with KPN,” the group said in a statement. America Movil (AMXL) also submitted an offer document to the Netherlands Authority for the Financial Markets without consulting with KPN, the foundation said.

The foundation said it continues to support the German transaction, leaving Telefonica’s deal assured.

Union Demands

Slim’s company is also contending with opposition from KPN’s works council, which asked Dutch lawmakers to help block the takeover. KPN’s unions want a guarantee that KPN’s strategy will be continued and solid assurances from America Movil for the future of KPN’s employees, according to Joost van Herpen, a delegate for the Abvakabo union.

The foundation is in charge of defending the interests of KPN’s shareholders, employees and customers, as well as Dutch society. It has existed since the Dutch government first sold shares in KPN in 1994. On its board are Chairman Jacques Schraven, Vice Chairman Pieter Bouw, Hans Zwarts, Jan Klaassen and Peter Wakkie.

The group’s call option allows it to obtain the KPN shares for at least 25 percent of their nominal value, which is 0.24 euro a share, according to the foundation’s website. The foundation didn’t say how much it paid to acquire the 4.26 billion shares it obtained. The group has a financing arrangement with Dutch banks to fund the share acquisition.

To contact the reporters on this story: Fred Pals in Amsterdam at fpals@bloomberg.net; Crayton Harrison in New York at tharrison5@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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