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

Hurdles the Deal Might Face

The proposed offer needs to be approved by anti-trust lawmakers. Also, KPN has stated that all possible options are being taken under consideration, and the deal would obviously need to be approved by KPN itself. Whatever that means for America Movil is not certain at this time, but KPN isn’t jumping to sell itself to America Movil.

A larger issue that Slim could face is that an independent foundation has the responsibility for defending KPN “from influences that may threaten the continuity, independence and identity” of the company, according to KPN’s filings. If that independent advisor group’s board sees this buyout as a threat, Slim’s ambitions could come to a halt.

Who Will Benefit if the Deal Goes Through

Investors in America Movil, KPN, or Telefonica should track the details of Slim’s $9.6 billion offer closely to see if the deal will go through or not. The more important question, though, is what are the implications if the proposed deal does get approved?

The primary beneficiary of an America Movil buyout would be KPN. Slim’s offer is a 35.4% premium over the average closing price of KPN’s ordinary shares. Investors in KPN would therefore be handsomely rewarded from the gains.

America Movil would most likely be benefited as well, although in a less tangible way. According to Sanford C. Bernstein & Company analysts, America Movil would need to cancel a share buyback program and obtain $4 billion of debt financing in order to buy out KPN. This purchase is certainly not guaranteed to succeed, but as previously mentioned Slim could use this buyout to gain more market share in Europe and obtain money from Telefonica.

Telefonica would most likely be the biggest loser if the KPN deal did go through. However, as previously discussed, Telefonica might still obtain E-Plus – but, at a higher price.

Overall, the full implications and structure of Carlos Slim’s $9.6 billion bid will unfold as time goes on. However, it stands to reason that Telefonica could be adversely affected while America Movil and KPN could emerge as the big winners from a KPN buyout.

The article Carlos Slim’s $9.6 Billion Bid originally appeared on Fool.com and is written by Evan Buck.

Evan Buck has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Evan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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