America Movil has abandoned its shareholders agreement with KPN. Signed in February this year, the original agreement followed the Mexican company acquiring an almost 30 percent stake in KPN. It gave AMX two seats on the Dutch operator's supervisory board and outlined plans for the operators to develop synergies through areas such as procurement, roaming and international traffic. America Movil also agreed to support KPN's rights issue and not increase its stake over 30 percent, the level at which a full takeover bid would be required.
To start with, one can conclude that America Movil's decision is related to the planned sale of E-Plus. It's not interested in KPN's fixed network in the Netherlands, the Dutch mobile activities are linked to that and Belgium is too small. We already concluded earlier that the sale was likely approved by KPN's board without the two AMX board members' backing. Apart from the (marginal) synergies between America Movil and KPN, the end of the shareholders agreement means that America Movil is likely reconsidering its stake in KPN. It has three choices: sell the stake, bid for all of KPN's shares or remain a minority shareholder.
- If it decides to sell the stake, its European strategy will take a bit hit, as it loses the opportunity to enter the German market. With the planned merger of E-Plus and O2, there will be no other way in. There still remain other opportunities for expansion, such as SFR in France, the UK's EE and Yoigo in Spain.
- A full bid for KPN could torpedo the deal with Telefonica to sell E-Plus. If such a move proves successful and E-Plus remains part of KPN, the company could launch its own takeover bid for Telefonica Deutschland. However this would require the cooperation of Telefonica, which still has majority control of the German unit, and the Spanish operator's willingness to exit the German market. That's not unthinkable, as Telefonica may want to focus more on Spain and Latin America.
- With its existing minority stake in KPN, AMX could try to convince the extraordinary shareholders meeting to vote against the proposed sale of E-Plus.
America Movil will not likely give up easily, assuming that the its interest in KPN primarily relates to E-Plus. The big question now is whether it will launch a full bid for KPN or try to stop the sale of E-Plus. Whatever the case, KPN's management will have a difficult time standing up to America Movil. This has greatly increased the chances of the E-Plus sale failing. And any bid for KPN will for this reason undoubtedly also lead to a big shake-up in top management at KPN.
