America Movil SAB de CV (ADR) (AMX), Telefonica S.A. (ADR) (TEF): Carlos Slim’s $9.6 Billion Bid

Page 1 of 2

Carlos Slim, the Mexican billionaire mogul who is the world’s second richest man, plans to buy out the Dutch telecommunications company Royal KPN (NASDAQOTH: KKPNY) for 7.2 billion euros ($9.6 billion). Slim is ratcheting up the battle between his own telecommunications company America Movil SAB de CV (ADR) (NYSE:AMX) and Telefonica S.A. (ADR) (NYSE:TEF) in the European stage. Will Slim’s $9.6 billion wager come to fruition for shareholders of America Movil SAB de CV (ADR) (NYSE:AMX) and Royal KPN, or is this development only to be fraught with regulatory hurdles and costly trouble? So far, Slim’s forays into Europe have only lost money on paper, but if he can successfully pull off this buyout then chances are the proposal might produce positive results.

America Movil SAB de CV (ADR) (NYSE:AMX) Events Leading up to Slim’s Buyout Offer

America Movil SAB de CV (ADR) (NYSE:AMX) currently provides telecommunications services to the United States, Latin America, and the Caribbean. America Movil SAB de CV (ADR) (NYSE:AMX) and arch-rival Telefonica S.A. (ADR) (NYSE:TEF) currently control about 60% of the mobile phone market in Latin America. Carlos Slim has been seeking to expand America Movil SAB de CV (ADR) (NYSE:AMX)’s reach in Europe, as shown by large stakes Slim bought in both Royal KPN and Telekom Austria in 2012.

Slim’s current endeavor to buy out Royal KPN is complicated by the stagnant state of the European economy and an agreement Royal KPN signed with Telefonica. Royal KPN has agreed to sell both KPN’s 17.6% stake in Telefonica S.A. (ADR) (NYSE:TEF) Deutschland as well as 100% of the company’s interest in German mobile operator E-Plus to Telefonica S.A. (ADR) (NYSE:TEF)’s German operations for approximately $6.7 billion.

Why Slim Would Gain from Acquiring Royal KPN

Slim would like to obtain the rest of Royal KPN in order to better compete in the European market. The $9.6 billion deal most likely is partially hinged on the assumption that Europe’s economy is going to rebound soon or that the telecommunications industry in Europe will improve.

Should America Movil SAB de CV (ADR) (NYSE:AMX) acquire KPN, they would be in a position to also gain E-Plus from Telefonica. E-Plus has a 15% stake in the German market, and acquiring E-Plus would be a damper on Telefonica S.A. (ADR) (NYSE:TEF) and significantly boost America Movil’s presence in Europe.

However, America Movil might seek to sell E-Plus at a higher price to Telefonica S.A. (ADR) (NYSE:TEF). Andres Bolumburu, an analyst at Banco de Sabadell, explains: “…the fact that Slim hasn’t made a decision over Telefonica’s bid for E-Plus suggests that the billionaire will seek a sweetened offer from [Telefonica].”

Telefonica desires E-Plus in order to compete with Vodafone and Deutsche Telekom in Germany. If Slim buys KPN, then he could ironically use KPN as leverage to obtain more euros out of Telefonica.

Regardless of what Slim or KPN does with E-Plus, it seems that the Mexican tycoon wants to expand America Movil’s reach and ratchet up competition with Telefonica.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!