Telecom Ramblings

Dutch telecommunications giant KPN (NYSE:KPN - chart, news) has raised its bid for IBasis (NYSE:KPN - chart, news) by 45%, from $1.55 to $2.25.  The initial bid of $1.55 was met with a rather loud rejection from iBasis’s board and a lawsuit to boot, the claim being that KPN was trying to snap up the company on the cheap at the expense of minority shareholders.  KPN owns some 56% of iBasis after merging its own international voice assets into the company several years ago, and the remaining 44% would cost a mere $70M.  KPN would like to own iBasis outright because it is one of the few independent, international VoIP carriers that has sufficient scale in that business going forward.

Now, there is little doubt that KPN was trying to buy it cheap, everyone wants to buy things when they are cheap and sell them when they are expensive.  The updated bid, although perhaps not high enough to satisfy everyone of course,  is nevertheless substantially higher and therefore it does seem that they are serious.  I’m curious what the board will say.  If KPN wants it badly enough, sooner or later they will get it – being the majority shareholder has its perks – the question is, at what price?

The KPN/iBasis saga over the past few months has paralleled the Icahn/XO mud-brawl.  It seems likely that the parallels will continue and we will see Icahn issue a higher bid for XO in the next few weeks that will look a lot like this one, calculated to be just enough to win the day.