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KPN in talks to buy E-Plus
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December 9, 1999: 7:39 a.m. ET
BellSouth woos Dutch operator to stop France Telecom buying Germany’s E-Plus
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LONDON (CNNfn) - Dutch telecom operator Royal KPN may join BellSouth’s effort to block France Telecom’s acquisition of E-Plus Mobilfunk, by buying a stake in the German mobile network operator.
KPN confirmed Thursday that it was in talks that could lead to it taking a stake in E-Plus in a move that would deal a heavy blow to France Telecom’s international expansion plans.
Analysts suggested BellSouth is seeking to draft in KPN to support its own takeover bid for E-Plus or maximize its return if it chooses to sell out.
KPN shares surged 10 percent to a record high of 69 euros Thursday morning before slipping to 66.35 euros at midday, a gain of 6 percent from the previous close.
France Telecom slumped 4.1 percent in early trade after dropping 6 percent Wednesday, but later recovered to trade marginally down at 117.30 euros.
BellSouth is one of the founding shareholders in E-Plus, with German utilities RWE (FRWE) and Veba (FVEB) and British mobile-phone giant Vodafone AirTouch (VOD).
BellSouth has a 22.5 percent stake in E-Plus and first refusal on acquiring the remaining shares, a position which threatens to derail France Telecom’s agreement in October to buy out the RWE, Veba and Vodafone stakes for more than $9 billion.
That price was viewed as low, indicating that BellSouth is seeking to boost the value of its shareholding if it cashes it in or elects to remain a key shareholder alongside a partner such as KPN.
Analysts suggested that KPN, the Netherlands’ privatized phone operator which spun off its postal business last year, was also seeking to build up its own cellular business, KPN Mobiel, as a defensive move against a takeover.
The company has said it was seeking alliances in France and Germany and has been linked with Cegetel, the French operator controlled by Vivendi (PEX). It has previously focused on expanding in central Europe but has a large cash pile after selling its stake in Ireland’s Telecom Eireann. Banking sources suggested it was also lining up a $13 billion loan to finance a purchase of E-Plus shares.
E-Plus, the third-largest German mobile-phone operator, is seen as a key prize because of the scope for growth in cellular subscribers in Germany with what is viewed as a comprehensive network.
BellSouth (BLS), whose stock gained 5/32 to 46-1/32 Wednesday, is due to decide whether to exercise its pre-emption rights Thursday.
For France Telecom, failing to take control of E-Plus would be a severe blow. The Paris-based company saw its move into Germany as a key strategic step to compensate for the breakdown of its alliance with erstwhile partner Deutsche Telekom (FDTE), which has itself moved into the French cellular market. 
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E-Plus
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