By Alexandra Alper and Sophie Sassard
MEXICO CITY/LONDON (Reuters) - Mexican billionaire Carlos Slim's America Movil
Spain's Telefonica
America Movil and Telefonica together control about 60 percent of mobile phone business in Latin America. The Mexican firm's surprise move to buy stakes in KPN and Telekom Austria
European telecoms firms are mostly struggling with saturated markets, recession-hit consumers, tough regulation and expensive network upgrades, leading some to look at consolidation.
America Movil has not expressed an opinion on Telefonica's bid for E-Plus, which is backed by KPN's board. But people close to the matter have said America Movil views the offer as too low and fraught with regulatory risks, fuelling speculation that it might try to block a deal or push for a higher price.
Telefonica said on Friday its offer still stands and is "definitive.
A Telekom Austria source said America Movil was likely to launch a bid for the rest of that company as well. The Mexican firm is currently barred from making a bid until after September 25, the anniversary of its purchase of a stake in the business. Telekom Austria shares rose 8.2 percent on Friday.
Telekom Austria declined comment on the matter.
Shares in America Movil, Latin America's largest phone company, fell more than 6 percent early on Friday on news of the KPN bid.
"By declaring his intention to make an offer for all of KPN, Slim has in reality drawn a line in the sand that tells Telefonica: This deal (E-plus) is not good enough," a person familiar with the matter said.
Telefonica wants E-Plus in order to strengthen its challenge to market leaders Deutsche Telekom
"It looks like Slim is speculating on how desperate Telefonica is to get its hands on E-Plus," said a German investor with shares in KPN, Telefonica and Telefonica Deutschland
Analysts said Telefonica, which has sizable debts, might struggle to pay much more for E-Plus, but they also questioned whether America Movil was offering enough to win over KPN's board and shareholders. They added that the Mexican firm's finances were also looking stretched.
"A 7 billion (euro) offer is a significant sum for (America Movil) and will significantly reduce their ability to do other M&A," said Espirito Santo analyst Will Draper.
VALUATION
America Movil said on Friday it would bid 2.4 euros per share in cash for the rest of KPN. That is about 35 percent above the average closing price of KPN's shares for the last 30 trading days, but well under the 8 euros per share it paid in May 2012 when it started building its KPN stake.
The offer values the whole of KPN at 10.2 billion euros, compared with the 8.1 billion euros that Telefonica has bid in cash and shares for just E-Plus.
At 1400 GMT, KPN shares were up 16.5 percent at 2.330 euros, while Telefonica shares were flat at around 10.965 euros.
KPN said it was considering America Movil's offer and would look at all options open to it. KPN shareholders are due to vote on Telefonica's bid for E-Plus in the coming weeks.
A second person familiar with the situation said KPN shareholders could be attracted to America Movil's offer because it was all cash and did not have the regulatory and integration risks associated with Telefonica's offer for E-Plus.
ING analyst Emmanuel Carlier said America Movil's offer seemed fairly priced, equating to an enterprise value (debt plus equity) of 4.9 times KPN's forecast core profit.
However, that is much less than the multiple of about 9 offered by Telefonica for just E-Plus. The Spanish firm expects hefty synergies from merging the German business with its existing operations in that country.
"I think Slim has to increase his offer in order to get people tendering their shares," said a second KPN shareholder, also speaking on condition of anonymity.
America Movil said it had invited KPN's supervisory and management boards to meet "as soon as possible."
The 160-year-old former Dutch telecoms monopoly has the option to block unwanted bids by handing preference stock to its "Stichting," or foundation.
KPN has been struggling to reverse a decline in revenues and profit in the face of stiff competition at home, where it still has a market share of about 45 percent in fixed-line and mobile telephony. The firm, which also has operations in Belgium, was slow to respond as consumers switched to free or cheaper ways of sending mobile phone messages, according to analysts.
Deutsche Bank is advising America Movil. Goldman Sachs and JPMorgan have advised KPN in recent deals
(Additional reporting by Sara Webb in Amsterdam, Ben Deighton in Brussels and Harro ten Wolde in Frankfurt and Michael Shields in Vienna; Editing by Mark Potter, Simon Gardner and John Wallace)
