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KPN has rejected a takeover bid worth about 18 billion euros from a private equity consortium in the last two weeks, putting pressure on bidders to increase their bid price for the Dutch telecommunications group .
EQT and Stonepeak Infrastructure Partners have been touring KPN since last year and have begun conducting due diligence early last month, according to several people with direct knowledge of the talks.
They submitted an offer, but this has been rejected by the KPN board, and the couple is now considering whether to increase their offer, according to a person with direct knowledge of the situation.
EQT and Stonepeak were preparing a possible offer of € 3 per share that would value the company at around € 12.5 billion. The company has debts of 5.2 million euros, which gives it a business value of almost 18 billion euros at this level. The Wall Street Journal first reported details of the potential bid.
KPN shares closed at € 2.87 last week after trading at just € 2 ahead of reports of a buying emergency.
This deal would be one of the largest private equity purchases in Europe, according to data from Refinitiv. Advent International and Cinven bought Thyssenkrupp’s elevator business last year in one 17.2 million euros agreement that was the largest in recent years.
EQT declined to comment. Stonepeak and KPN did not immediately respond to requests for comment.
Joost Farwerck, CEO of KPN, said last week that any private takeover bid should be considered for the best interest of employees and customers as well as shareholders.
Farwerck noted KPN’s investment in improving its telecommunications network as a sign of its intention to grow. “We will create a lot of value, maybe not immediately in twelve months, but yes in several years,” he said in a media call.
KPN has established a plan to expand its fiber network to 80% of the population of the Netherlands in 2026 after forming a joint venture with APG, a Dutch pension fund.
Siyi He, a Citi analyst, said in a note that accelerating the fiber program over the next three years should value KPN at € 3.5 per share, so an offer at that level seemed possible.
The main impediment to a purchase could be the Dutch government and whether it would allow a private equity consortium to acquire a critical national asset. A Dutch telecommunications veteran described it as an “impossible deal” as bidders will have to negotiate with a board that will likely be backed by the government, which could cancel any hostile bid.
KPN has long been considered a potential candidate for acquisition, but potential buyers have been deterred by political risk.
América Móvil, the Mexican telecommunications company controlled by billionaire Carlos Slim, tried to acquire KPN for 7.2 billion euros in 2013, but was blocked by the intervention of an independent foundation linked to the telecommunications group. Slim still owns one-fifth of KPN’s shares and in February raised € 2.1 billion in bonds through a Dutch subsidiary that can also be turned into shares of the telecommunications company.
EQT, based in Stockholm, is already active in European telecommunications, owning Delta Fiber, a small rival of KPN in the Netherlands, as well as telecommunications assets in Germany and Sweden. Last month it agreed on a £ 3bn deal to buy FirstGroup’s bus operations in the United States through its infrastructure fund. The units, First Student and First Transit, include tens of thousands of yellow buses.
New York-based Stonepeak focuses on American offerings.
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