Dutch telecom company KPN will spend €1.4 billion of excess cash on buying back shares and debt, dampening market speculation it plans a fresh bid for British mobile firm mm02.
KPN said it would buy its own shares on the open market, starting with a sum of €500 million or three per cent of the company's outstanding share capital at yesterday's close. It plans to cancel these shares.
"This shows that a near-term takeover of mmO2 is not likely," Mr Mark-Pieter de Boer, an analyst at Kempen & Co, said in a note, reiterating an "add" rating on the share.
Speculation has been rife that KPN might make a new bid for mmO2 of around £11 billion, after the group rejected an offer tipped at around £9.3 billion three weeks ago.
KPN again denied talk it is working on a fresh bid for the fourth biggest mobile phone group in Britain and Germany, but added that it continued to eye possible buys.
Speculation of a bid had propelled mmO2 shares 22 per cent higher in recent days and pushed KPN's down seven per cent.
But investors are still smarting from KPN's last shopping spree which created a €23-billion debt mountain that forced the company to bring on new management and launch an emergency refinancing as it cut jobs, costs and sold off assets.
Spain's Telefonica, the BT Group, Japan's NTT DoCoMo, Hong Kong's Hutchison Whampoa and Deutsche Telekom have been named as potential counter bidders for mmO2.