By Robert-Jan Bartunek
BRUSSELS | Fri Aug 30, 2013 2:28pm EDT
BRUSSELS (Reuters) - America Movil threatened to abandon its 7.2 billion euro ($9.5 billion) bid for Dutch telecommunications group KPN on Friday after a company foundation told the Mexican firm to make a better offer or it would veto the bid.
The foundation, an independent group of former executives from Dutch companies tasked with protecting the interests of KPN stakeholders, bought almost 50 percent of KPN's voting stock late on Thursday, blocking the deal.
America Movil responded testily to the foundation's move, insisting it was not going to pay more for KPN.
Slim's spokesman and chief aide Arturo Elias told Reuters the company had no intention of raising its offer price for KPN, and that America Movil had been shown a "lack of respect" in its dealings with the Dutch company.
"We're very puzzled by the position of this foundation. I don't know if it's a negotiating strategy, but it's certainly not the right one," he said, accusing the foundation of telling a "big lie" by claiming America Movil's offer was hostile.
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 foundation.
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, which holds nearly 30 percent of KPN, 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.
But the company is unwilling to agree to curbs on its managerial involvement in KPN's operations and will have to analyze whether to maintain its stake in the company if the takeover offer does not succeed, said Elias, who is also Slim's son-in-law.
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 12.95 pesos ($0.97) per share amid worries that there could be still room for more talks.
On Wednesday, America Movil met KPN's labor 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 September.
BLOCKING MOVES
"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."
There was no immediate comment from the European Commission.
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 Elias said the company has no plans to use European courts to press their case for the KPN takeover.
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 in 2008.
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 said.
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."
($1 = 13.3520 Mexican pesos)
(Additional reporting by Sara Webb and Anthony Deutsch in Amsterdam and Tomas Sarmiento and Alexandra Alper in Mexico City; editing by Louise Ireland, G Crosse and Leslie Gevirtz)
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