America Movil SAB, committed to sticking with its current targets for debt leverage, is unable to acquire a major part of AT&T Inc. (T:US)’s $5.76 billion stake, a person with direct knowledge of the matter said.
While its repurchase program lets it acquire shares once owned by AT&T when they’re in the open market, America Movil has no plans to buy any significant portion of AT&T’s stake, said the person, who asked not to be identified because the matter is private. AT&T said two days ago it plans to divest the shares.
A public sale of AT&T’s 8 percent holding is seen as the most likely scenario, said another person familiar with the thinking of America Movil owner Carlos Slim. Such a secondary offering could let Slim and his family add to their personal stakes if they choose.
AT&T is unloading the stake to help seal regulatory approval in Latin America for its $48.5 billion acquisition of DirecTV, the satellite-TV company that competes with America Movil for Brazilian and Colombian subscribers. AT&T’s holdings were worth about 74.4 billion pesos ($5.76 billion) as of last week’s close.
While acquiring and canceling all of AT&T’s shares would give America Movil investors an 8 percent return, it would boost America Movil’s net debt to twice its annual earnings before interest, taxes, depreciation and amortization, said Carlos de Legarreta, an analyst at Corporativo GBM SAB in Mexico City. The ratio was at 1.6 last quarter, and America Movil has said it plans to reduce it to 1.5.
Slim could also opt to buy shares directly, Legarreta said.
“It would send a positive message, of his trust in the business and the opportunities he’s seeing,” Legarreta said. The companies haven’t said whether America Movil will acquire those shares.
An America Movil press official declined to comment. An AT&T press official had no immediate comment.
AT&T’s America Movil holdings include 24 percent of the Mexican company’s AA shares, which carry special voting rights and aren’t publicly traded. AT&T could now convert its AA shares into L shares and sell them to the market, Legarreta said.
America Movil’s L shares dropped 4 percent to 12.69 pesos yesterday in Mexico City, the biggest decline since Aug. 9. Dallas-based AT&T slid 1 percent to $36.38 in New York, while DirecTV fell 1.8 percent to $84.65.
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