The KPN board is getting schooled by Carlos Slim and the Mexican telecommunications giant America Movil. Today AM announced that after additional transactions, it has taken its minority position from 8.7% the other day all the way up to 20.9% via both on and off market transactions.
AM had approached KPN about buying a 27.7% stake in the Dutch incumbent for EUR8, and was rebuffed for bidding too low to gain such an exalted ownership position. AM started buying shares on the open market for lower rates while KPN advised its shareholders not to listen. Obviously those shareholders in fact have not listened to somebody, but it wasn’t Carlos Slim and AM.
KPN apparently even demanded in further negotiations that AM give up some voting rights in acquiring the minority stake they desired. Sure you can own a piece of us, as long as you shut up and sit over there while we ignore your input. Yikes, is it any wonder that AM turned around and bought more in the open market? Now they own more than 20% without breaking a sweat – it’s been only three weeks. They are rather publicly demonstrating that KPN’s board is out of touch with the market’s perception of its value.
And still KPN’s board is talking up its strategic alternatives. Earlier this week they stopped trying to shop their German EPlus unit due to market conditions, but today said they will their Belgian operations. The company’s stock price remains below Slim’s original bid.
Think about that for a second. If Warren Buffet were publicly buying up 20% of KPN right now, would the stock price have moved? Slim is one of the world’s richest men, with long experience turning telecommunications assets not so different from KPN’s into both cash and power. But he’s also from Latin America, and the balance of ‘who tells the other how to do business’ has always run to that part of the world from Europe, not the other way around. Pride goeth before the fall?
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