UPDATE: BUY KPN NA, ABS -0.7% – Reported bid light but downside remains low
*WSJ reports a pair of PE firms have teamed up to make a bid for KPN that could value it at more than USD 15bn citing people familiar (implies EUR 3)
*Price seems very opportunistic to us but it should put the name it a bit more of play, as previously speculated the interest comes from EQT (and Stonepeak Infrastructure Partners)
*We still like the name as a buy at EUR 3 as we still see low downside (EUR 2.6-2.7) – for a successful bid we expect they need to pay up > EUR 3.5 and for now with the JV with the Dutch pension fund and elections having passed the timing seems right for an approach although it might take some time to get an agreement in place with the government
BUY KPN NA – All lining up, +30% upside potential
Tuesday • 30 March 2021 • 11:52
*We continue to see KPN cheap as our DCF valuation comes in around EUR 3.75 which leaves a +30% upside
*With the elections out of the way, the Green party having lost half of their seats, and KPN’s agreement with APG (Dutch pension fund) to participate in a joint venture to further accelerate the fiber rollout in the Netherlands, we see a clear path to for any (long speculated) PE buyer to approach the government to negotiate approval for a bid
*We have through the last months expected that any foreign buyer would need a local partner in order for a successful bid – similar to what we saw when Macquarie launched a bid for TDC DC
*The 2023 Ambitions and further acceleration of the fiber rollout leaves good prospects for the company as a standalone as well although we see a potential for the stock dropping to around EUR 2.6 in case arbs lose hope in the name but see the +30/-10% risk reward as attractive here