América Móvil seeking full control of Telekom
By Alexander Weber
and Patricia Laya
Bloomberg News
VIENNA – América Móvil is bidding as much as $1.96 billion to buy out Telekom Austria’s minority investors, seeking to cement control of the European phone carrier after striking a shareholder pact with the government.
The agreement with state holding company OeIAG, sinned late Wednesday, gives the partners a majority stake together in Telekom Austria. América Móvil will offer €7.15 ($9.88) a share for the rest of the company — a 7.5 percent premium over Wednesday’s closing price of €6.65. Telekom Austria rose as much as 8.3 percent in Vienna.
The agreement is the culmination of a two-year quest by América Móvil, controlled by billionaire Carlos Slim, to establish a beachhead in Europe to expand beyond Latin America. The Mexico City-based company said it will vote for and contribute to a €1 billion capital increase by Telekom Austria to invest in the eight countries where it currently operates — and possibly others in central and eastern Europe.
“This agreement provides the basis for future growth, continued innovation, and solid investment in Telekom Austria,” América Móvil Chief Executive Officer Daniel Hajj said in a statement. “It will also contribute to better position Telekom Austria as a more relevant player in the European telecommunication markets and to be in a position to benefit from growth opportunities in the region.”
Under the 10-year agreement, OeIAG will keep a blocking minority of 25 percent plus one share and will nominate Telekom Austria’s chairman and CEO, the state holding company said in an emailed statement.
Austria currently owns 28.4 percent of Vienna-based Telekom Austria, while América Móvil holds 26.8 percent, according to data compiled by Bloomberg.
The deal was still in doubt at the close of trading Wednesday in Vienna, where Telekom Austria shares fell 3.2 percent.
The accord gives Slim, 74, a victory to celebrate after he failed to persuade Dutch phone company Royal KPN NV to accept a takeover offer of as much as $9.7 billion last year. Now he must convince América Móvil shareholders of the wisdom of investing in Europe. América Móvil’s stock has fallen 31 percent since the company first disclosed a stake in KPN in May 2012.
Slim built a telecommunications empire in Latin America by offering cheap prepaid phone plans. The market in Europe is much different, said Julio Zetina, an analyst at Vector Casa de Bolsa SA.
Europe has “very developed markets, particularly in telecoms, with completely different drivers than Latin America’s, not to mention affordability levels,” Zetina said. “América Móvil’s strengths are not as evident there.”
The Telekom Austria buyout offer can be easily financed by América Móvil, Zetina said. The company has about $3.7 billion in cash, according to data compiled by Bloomberg.
“América Móvil’s offer is very generous,” Berenberg Bank analyst Usman Ghazi said in a note to clients. “Some of the largest central and eastern European markets Telekom Austria operates in are subject to some combination of recession, hyper-inflation and foreign exchange risks, and its domestic Austrian business generates an operating free cash flow margin that is half that of the sector.”
“In the long term, we like to see them enter Europe,” Carlos de Legarreta, a telecommunications analyst at Corporativo GBM SAB, said in a phone interview from Mexico City. “Geographic diversification is healthy for América Móvil. It exposes it to different markets and dynamics, away from regulation and increased competition in Mexico.”
Slim’s company and OeIAG overcame a last-minute hurdle that threatened to block the deal. Union representatives boycotted OeIAG’s supervisory board meeting in Vienna Wednesday, leaving it without a quorum for 12 hours, people familiar with the situation said.
Peter Mitterbauer, OeIAG’s supervisory board chairman, saved the deal by taking a plane from Israel to Vienna Wednesday to give the board the quorum it needed to approve the agreement, said people with knowledge of the matter, who asked not to be identified because the process was private.
No comments:
Post a Comment