Bloomberg News

Slim Boosts Odds of Winning KPN After Failed German Talks

June 21, 2012

Royal KPN NV (KPN), seeking to fend off America Movil SAB’s 2.6 billion-euro ($3.3 billion) bid for a stake in the Dutch phone company, will start the sale of its Belgian mobile-phone division next month.

KPN completed a strategic review and will begin the sale process of the BASE unit in July, which people familiar with the matter previously estimated may fetch about 1.8 billion euros. The Hague, Netherlands-based KPN reiterated today that America Movil’s 8 euro-a-share unsolicited offer for as much as a 27.7 stake undervalues the former Dutch phone monopoly.

KPN is moving ahead with a disposal after ending discussions on potential market consolidation involving its E- Plus unit in Germany because of “adverse conditions” in the financial markets. To defend itself, KPN had been evaluating options with Telefonica SA (TEF), including a merger of KPN’s E-Plus unit with Telefonica’s O2, the two smaller of Germany’s four wireless operators, people familiar the matter said this month.

“I can’t imagine that America Movil is going to be best pleased at the tactic of selling off one of the growth assets, even if it was the smaller one of the two,” said Paul Marsch, an analyst at Berenberg Bank in London.

KPN shares fell 5.3 percent to close at 7.48 euros on the Amsterdam exchange today. The failed talks in Germany left KPN Chief Executive Officer Eelco Blok with few options to counter America Movil’s offer, which ends June 27. KPN said today its accelerated investment strategy in the Netherlands is on track.

“BASE is a best-in-class No. 3 mobile player in Europe,” KPN said. “The proceeds will be used to improve KPN’s credit profile and financial flexibility.”

KPN said April 16 it had started reviewing the future of BASE. Private equity firms including Bain Capital LLC and CVC Capital Partners Ltd. are among those that may make an offer, people familiar with the matter said at the time.

Liberty Global Inc. (LBTYA:US) CEO Mike Fries said in a June 12 interview that he would consider the Belgian asset.

“We’ll take a look at it,” Fries said. “Whether it’s something we’ll do is hard to say.”

To contact the reporter on this story: Jonathan Browning in London at jbrowning9@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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