By Arnout Nuijt
Late Thursday night news broke that Dutch telecoms firm KPN had activated its firewall against a hostile takeover by Mexican magnate Carlos Slim. A foundation, led by a handful of venerable representatives from Dutch business circles, exercised its right to emit emergency shares that would give it nearly 50% of voting rights on KPN’s board. Such foundations are commonplace among Dutch larger companies, as the country’s economic establishment abhors takeovers that have not been the result of lengthy negotiations with shareholders, management and employees.
Mr Slim could and should have known. Was he misinformed or did he believe that he could pull this off, just as he had pulled off other takeovers? Was this miscalculation the result of a magnate’s autocratic management style or just plain hubris of the world’s richest man? The thing is when Dutchmen or other Europeans intend to invest in Mexico, Brazil or other places, they are told to get themselves acquainted with local business styles, to get a local partner who knows the specific particularities of the market and who has an excellent network. The potential investor is also told that he will be in for the long run and he should take his time. Do Latin American investors receive similar advice about investing in the Netherlands? If not, they should.
Dutch daily Financieel Dagblad reported Saturday that KPN’s foundation had been waiting in the wings for a long time before it made its move. In its editorial on the same day FD wrote that the foundation’s actions were completely justified. Mr Slim did not play by the rules, because there is no clear picture of what will happen to KPN after his takeover. Instead, the foundation now invites Mr Slim to sit down with KPN and draw up a takeover protocol together. Mr Slim immediately threatened to withdraw his offer for KPN shares and KPN’s share price sank well below the price offered by him.
Hostile takeovers in the Netherlands are rare. This is a country that believes in consensus making. Foreign magnates are automatically regarded with suspicion in the Netherlands, where egalitarian sentiments are alive and kicking, fuelled by both Calvinist and social-democratic undercurrents. Large stock listed companies ruled by autocrats do not exist. There are simply too many checks and balances for bosses to really be the Boss.
Most companies have drawn up their defences and are ready to use them in case of hostile – meaning non negotiated – takeovers, even at great cost. To recall one example: in the late 1980s Norwegian investor Torstein Hagen made a hostile takeover attempt for Nedlloyd, a Dutch shipping company. Nedlloyd management panicked, dug in and years of defensive manoeuvring followed, while the company was going down. Hagen even moved to Rotterdam and showed the best intentions, but to no avail.
Let’s hope the KPN case will not end in lengthy destructive moves. América Móvil’s other shareholders would suffer as well. Among them is AT&T, once rumoured to have plans for KPN too. These rumours did receive good press in the Netherlands, contrary to Mr Slims plans, who was recently cartoonized as a pistolero by Dutch quality newspaper NRC. That was maybe too easy, but the cartoon was a bad sign for Mr Slim.
Mr Slim still holds almost 30% of KPN shares, a percentage that may become even higher at the outcome of his share offer, if continued. But with the foundation effectively blocking a full takeover, what can Mr Slim do? If Mr Slim decides to hang on to his share, he will not gain a stronger say in KPN. To avoid lengthy and destructive standoffs for both KPN and América Móvil, Mr Slim might try to sell his part. But who would buy? AT&T perhaps?
In any case Mr Slim’s adventures in the Netherlands appear to be coming to an end. Just remember, in Holland the boss is never a Boss. Saludos, jefe!
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