) 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
) 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
) 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
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
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
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