This presentation includes basic aspects about White Squire Defense Technique in takeovers and a case study about the one-time World's richest man's i.e. Carlos Slim's company America Movil attempt on taking over KPN in a hostile way and how the deal was scrapped by KPN.

1. White Squire Takeover Defense:
Case of American Movil’s attempt to takeover KPN
Vinay Pednekar
Bombay Stock Exchange Institute LTD.
+91 8454033766
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2. 'White Squire'
• Definition:
 A white squire is an investor or friendly company which buys a
stake in a target company to prevent a hostile takeover.
• Difference between white squire and white knight defense:
 This is similar to a white knight defense, except the target firm
does not have to give up its independence as it does with the
white knight, because the white squire only buys a partial
share in the company.
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3. BREAKING DOWN 'White Squire'
• A white squire is a friendly acquirer which does not
require a controlling interest like a white knight does.
• Its stake is just large enough to block the bidding
company, and gives the target company time to rethink
its strategy.
• The white squire may be given a seat on the board,
offered discounted shares or promised generous
dividends, as an incentive to do the deal.
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4. Cont……
• Once the unfriendly acquirer has withdrawn
its bid, the white squire will typically sell its
shares.
• To prevent it from switching allegiances in the
future, the deal may be structured so that the
shares given to the white squire may not be
tendered to the hostile bidder.
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5. Background of the Case Study
• In August 2013, América Móvil offered to take over the remaining
70% stake of the Dutch telecommunications company for 7.2 billion
Euros ($9.49 billion).
• América Móvil currently owns close to 30% of KPN. The Dutch
Government has issued a warning on this proposed takeover of KPN
by Mexican Billionaire Carlos Slim, as part of his ambition to expand
his telecom empire.
• The plans eventually ended when the "Stichting Preferente
Aandelen B KPN" exercised a call option to gain 50% of the total
shares, in order to put up a temporary protection wall against the
hostile takeover.
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6. About the Acquirer
• América Móvil(AM) is a Mexican telecommunications
corporation headquartered in Mexico City, Mexico.
• It is the fourth largest mobile network operator in terms of
equity subscribers and one of the largest corporations in
the world.
• América Móvil is a Forbes Global 2000 company. A venture
of Carlos Slim, América Móvil provides services to
 289.4 million wireless subscribers,
 34.3 million landlines,
 22.6 million broadband accesses
 21.5 million PayTV units as of the end of 2014
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7. About the Target Company
• KPN (in full Koninklijke KPN N.V., also Royal KPN N.V.) is
a Dutch landline and mobile telecommunications company.
• KPN started as a public telecommunications company and is based
in Rotterdam, Netherlands.
• The shareholding pattern of the company is as follows:
 Stichting Preferente Aandelen B KPN (50.07%)
 America Movil (14.86%)
 Capital Group Companies(10.68%)
 Norges Bank (3.09%)
 BlackRock (2.69%)
 Ontario Teachers' Pension Plan (2.19%)
 JP Morgan Chase (1.07%)
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8. Modus Operandi
• Carlos Slim led América Móvil launched a
(euro) 7.2 billion (US$9.6 billion) bid for the
part of Dutch telecom company Royal KPN
NV(Listed on the Amsterdam Stock Exchange)
it doesn't already own, in a challenge to a rival
offer for KPN's prized German mobile group E-
Plus.
• Motive of Hostile Takeover
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9. Cont……
• Movil's (euro) 2.40 per share bid for KPN was
announced first offers a 20 per cent premium
on the closing price of previous day, valuing
the company's stock at around (euro) 10.3
billion, and the 70 per cent it doesn't already
own at (euro) 7.2 billion.
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10. Complications to Carlos Slim’s Vision
• The following were the challenges that
América Móvil had to go through which
resulted into the failure of the deal:
 Telefonica’s (Spanish rival Of América Móvil)
Counter Offer.
 Dutch Government's Intervention
 Stichting Preferente Aandelen B KPN (Dutch
Telecoms Firewall)
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11. Telefonica Saga
• Telefonica was the spanish rival of AM and as
soon as AM initiated the offer to buy the
whole stake of KPN, it came into the limelight.
• The motive of Telefonica was to buy KPN’s
strategic arm i.e. E-Plus which has a 15% stake
in German Markets.
• After a while Telefonica had to exit the deal
because of some key factors such as:
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12. Cont……
 Pressure from Carlos Slim as he wanted to exit
at a higher price
 Telefonica had to increase it’s big furthermore
on E-Plus which it couldn’t afford
 Carlos Slim had plans to takeover the whole
company and not just a segment of it.
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13. Dutch Government’s
Intervention
• The Government intervention came into the picture after a
council representing employees of KPN urged
authorities to halt América Móvil's planned bid.
• The Dutch Minister of Economic Affairs, Henk Kamp stated
that any decision to sell shares in KPN, which was privatized
in the 90's, is up to the shareholders.
• He referred this to the importance of KPN's infrastructure
and the use of KPN's network for emergency service
communication systems and KPN services used by
government institutions.
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14. Cont……
• He also explained that an acquisition of KPN
by a “foreign company” could have
consequences for the Netherland’s national
security
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15. KPN’s Firewall
• Dutch telecoms firm KPN had activated its firewall i.e. Stichting
Preferente Aandelen B KPN 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.
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16. The Letter from Stichting Preferente
Aandelen B KPN
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17. Aftermath
• After the whole saga there was a burden of questions
to the world’s richest man at that time(According to
Forbes Magazine) i.e. Carlos Slim such as:
 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? Etc.
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18. Cont……
• América Móvil's stake in KPN as on December
2015 is 14.86%
• Stichting Preferente Aandelen B KPN (The
saviour foundation) has a controlling stake of
50.7% in KPN
• América Móvil after this case indulged more
into acquiring fellow telecom companies and
has managed to rank itself 160th in Fortune
500’s list.
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19. Summary
• White Squire defense technique basically
means is the idea where an independent
company comes across to help an organization
which is to be taken over in a hostile manner.
• This technique is pretty rare in the markets
and companies usually opt to go for White
Knight rather than the Squire.
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20. Bibliography
• Jamaica Observer
• Forbes
• Rotterdam Weekly
• Wikipedia
• Stichting Preferente Aandelen B KPN Website
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21. Thank You.
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