Dutch State Sells Rest of KPN Stake for EU1.7 Billion
The Dutch government agreed to sell its remaining 8 percent stake in Royal KPN NV, the biggest Dutch phone company, for about 1.7 billion euros ($2.17 billion) to lower debt.
KPN will buy 80 million shares for about 800 million euros, The Hague-based company said today in an e-mail. Goldman Sachs Group Inc. and Citigroup Inc. are today selling 87 million to money managers, the banks said in an e-mail to clients.
The Dutch state is selling stakes to foster competition and generate cash to pay down debt. The government has raised at least 10 billion euros since 2003 selling stakes in 18 companies including KLM Royal Dutch Airlines NV and TNT NV, which operates the Dutch postal service, before today.
“The government is a smart investor and usually picks the right time to sell,” said Philippe Kiewiet de Jonge at ABN Amro Asset Management in Amsterdam, who helps manage 480 million euros, including KPN shares. “It means something that the state is selling against this price. From this level, KPN needs an extra push to rise.”
Shares of KPN, headed by Chief Executive Officer Ad Scheepbouwer, fell as much as 19 cents, or 1.9 percent, to 9.85 euros and traded at 9.88 euros as of 10:05 a.m. in Amsterdam. Before today, shares had gained 19 percent this year, while the benchmark AEX-index rose 9.5 percent.
Swisscom, Telekom Transactions
European governments have been cutting stakes in their country’s former phone monopolies as they further open up telecommunication markets. Switzerland’s government last week sold a $1.8 billion stake in Swisscom AG, the country’s largest phone company, three months after lawmakers blocked a proposal to sell the shares to the public.
In April, Germany’s state-owned development bank sold a 2.68 billion-euro stake in Deutsche Telekom AG, Europe’s largest phone company, to Blackstone Group LP, a New York-based buyout firm.
The Dutch government first sold shares in an initial public offering in KPN in 1994 and owned 8 percent of the company before today’s sale, according to the Web site of the Finance Ministry.
In December, the state gave up its golden share in KPN, which gave it veto rights over decisions such as mergers, takeovers and share sales, removing a hurdle to a potential takeover of the former Dutch phone monopoly.
Lowering Borrowings
The Dutch state plans to use the proceeds of about 1.7 billion euros to lower borrowings, said Finance ministry spokesman William Lelieveldt. NM Rothschild & Sons Ltd. advised the Dutch government on the sale.
The Netherlands’ debt is forecast to drop to 265.3 billion euros next year from 265.7 billion euros in 2006, according to the 2007 budget presented to parliament by Finance Minister Gerrit Zalm on Sept. 19.
KPN is eliminating about 8,000 jobs by the end of 2009 to increase profit margins. The company is also investing in services such as digital television as customers flee its traditional phone service for competitors including Tele2 AB.
Takeover Target?
“This step might further increase takeover speculation,” Frank Claassen, an analyst at Rabo Securities in Amsterdam, wrote in a note to investors. “We did not consider this last 8 percent stake of the Dutch state to be a major hurdle.” He rates KPN shares “hold.”
“KPN may indeed be a takeover target, but it may easily take another” one to two years, according to Claassen.
The company said last month second-quarter net income doubled to 464 million euros on job cuts, higher German mobile revenue and new services including Internet calls. The company raised its full-year earnings forecast.
Source- http://www.bloomberg.com
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