America Movil Ups KPN Stake to 28% - Analyst Blog
June 29 2012 - 5:45AM
Zacks
America
Movil’s (AMX) month-long pursuit to up
its stake in Koninklijke KPN NV has finally ended on a positive
note. The Mexican Telecom giant increased its stakes in KPN to the
target of 27.7%. The company issued a tender
offer to acquire the remaining 2.8% for EUR8 per share that expired
on Wednesday. The offer was accepted by 39.66% of all outstanding
shares, which was more than enough to raise the company’s interest
beyond the target of 28%.
In May, America Movil offered to
increase its minority stake in Koninklijke KPN NV (a Dutch
telecommunications company) to 28% at €8.0 per share, for an offer
totaling €2.64 billion. However, Koninklijke KPN rejected this,
citing the offer as under valued. To debar America Movil from
raising further stakes, Koninklijke KPN was also planning a
spin-off of its German mobile subsidiary E-Plus, allowing potential
merger prospects with Telefonica S.A.’s (TEF)
German subsidiary O2.
According to reports, the merger of
these two German units would have generated €4 billion in annual
synergies, thus making it attractive for investors. Koninklijke KPN
considered this prospective merger as a significant strategy that
would divert shareholders’ attention from America Movil’s offer.
The company believed that the merger of E Plus and O2 would have
enhanced KPN’s share value, and make America Movil’s offer less
attractive or push the offer price higher. However, KPN recently
called off its spin off plans citing failure in reaching an
agreement with O2 given the current economic
backdrop.
Acquisition plays a key role in
driving growth at America Movil. Last year, the company acquired
Pay-TV firm Net Servicos, the largest multi-service cable company
in Latin America. In January, the company collaborated with Claxson
Interactive Group to acquire DLA Inc. which offers video-on-demand
service on cable-TV channels in Latin America.
America Movil also entered into a
partnership with AT&T (T) in November last
year, to expand its reach in emerging markets in Asia and the
Middle East. America Movil will use AT&T's global network
infrastructure to provide Internet services worldwide. In exchange,
the company will offer virtual private network services to
AT&T’s multinational clients operating in Latin America.
Going forward, America Movil’s
Tracfone plans to acquire Simple Mobile, subjected to regulatory
approval. Recently, America Movil also acquired a 4.1% stake in
Austria’s biggest telecom company Telekom Austria.
We expect the company to continue
focusing on its acquisition strategies in order to stay afloat in a
highly-competitive telecom market and tap the opportunities in
wireless services and pay-TV business.
We currently maintain a long-term
Neutral recommendation on America Movil. For the short term (1-3
months), the stock has a Zacks #3 Rank (Hold).
AMER MOVIL-ADR (AMX): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
TELEFONICA S.A. (TEF): Free Stock Analysis Report
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