KPN board breaks silence and confirms Movil bid

AMSTERDAM (AP) — Dutch telecoms firm KPN NV broke a month’s silence Thursday and confirmed that it is in talks with Carlos Slim’s America Movil over a takeover bid.

Last month, Movil said it planned to launch a 7.2 billion euro ($9.5 billion) offer for the 70 percent of Royal KPN NV it doesn’t already own.

In a somewhat ambivalent press statement, KPN’s management team said it considered the Mexican billionaire’s bid “unsolicited,” but stopped short of calling it hostile. However, it said the two companies are in “constant and constructive” talks. KPN’s share price rose 1.1 percent Thursday to 2.26 euros.

“The interests of our shareholders, employees, customers and other interested parties are being examined and weighed carefully in this process, in financial and non-financial terms, including the vital role that KPN plays in Dutch society,” KPN CEO Eelco Blok said. “We … expect to be able to give more clarity at a later time.”

The Netherlands’ shareholders’ rights organization VEB has openly criticized Blok for leaving investors in the dark as to what he thinks of Movil’s proposed 2.40 euro per share bid, which is nearly 50 percent above where KPN shares were trading in July.

The confirmation of the discussions follows the resignation earlier this week of KPN’s CFO Eric Hageman. He cited unspecified personal reasons for his decision.

Analysts at ING said in a note that the confirmation of talks was “a step in the right direction.”

At the end of August, the “KPN Foundation” — a KPN-linked institution peculiar to the Netherlands — took a poison pill measure designed to block the Movil takeover, which it termed “hostile.” The Foundation issued itself new preferential shares in KPN and now holds 49.9 percent of KPN’s voting rights.

Slim, in turn, threatened to walk away from his intended offer. He argued that in addition to the premium he is offering shareholders, America Movil’s involvement in KPN would benefit employees and customers, by helping the company return to growth and by investing in its infrastructure.

KPN’s earnings and share price have declined precipitously since Blok took the helm in 2011.

Customers with smartphones have ditched KPN’s profitable SMS text messaging service in droves, switching instead to cheaper Internet-based services such as WhatsApp and Skype.

In April, KPN was forced to issue 3 billion euros of new shares to cut debt. And in July it decided to sell arguably its most attractive asset, German mobile provider E-Plus, to Telefonica SA of Spain. Telefonica is one of Movil’s main competitors.

Movil agreed to support the sale after negotiating an $11.4 billion sales price — $1 billion better than the deal KPN initially struck on its own.

Movil said Thursday in a statement that it remains committed to the takeover talks, but warned that the intended offer depends on the Foundation giving up its shares.

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