KPN Has Rejected Telefonica Bid For E-Plus -Source

06/01/2012| 03:22pm US/Eastern

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   By Archibald Preuschat 
   Of  
 

Dutch telecommunications company Royal KPN NV (>> KPN KON) has rejected a bid from Telefonica SA (TEF) for its German mobile operator E-Plus, a person familiar with the matter told Dow Jones Newswires Friday.

The Spanish telecom giant, which operates O2, the smallest mobile network provider in Germany, made the offer last week, the person said. The person has no detailed information about the value of the bid. KPN, however, rejected the bid, arguing it undervalues the asset.

Despite its EUR57 billion net debt, Telefonica made the offer as it considered a partial tender offer of America Movil SAB de CV (AMX) for KPN as a sort of "declaration of war," the person said.

Earlier Friday, KPN's board rejected the offer as too low and recommended shareholders not to tender.

America Movil, controlled by billionaire Carlos Slim, and Telefonica are Latin America's No. 1 and 2 telecom companies, competing fiercely in markets like Mexico and Brazil.

Slim's first significant attempt to expand in Europe was thwarted by Telefonica when the Madrid-based company outbid the Mexican company to buy a minority stake in Telecom Italia SpA (TI, TIT.MI) in 2007.

America Movil offered EUR8 per share in a partial tender offer, to raise its stake in KPN from its current 5% to almost 28% in a EUR2.64 billion move.

A spokesman for Telefonica in Madrid declined to comment. A spokesman for KPN also declined to comment and referred to the company's statement earlier Friday, saying that KPN is reviewing all its strategic options for E-Plus.

Germany's third largest mobile firm E-Plus is highly profitable and has a market share of roughly 16% and contributed EUR3.24 billion to the company's revenue in 2011, or a quarter of KPN's total revenue.

-By Archibald Preuschat, Dow Jones Newswires; +31 20 5715 218; archibald.preuschat@dowjones.com

--David Roman in Madrid contributed to this article

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