VIENNA (Reuters) - Tycoon Carlos Slim stumbled in his bid for control of Telekom Austria (TELA.VI) on Wednesday, as a meeting designed to rubber-stamp a co-ownership deal with the Austrian government was boycotted by labor representatives unhappy with the proposal.
The deal is important for Slim because it could finally allow him to begin consolidating the fruits of a European adventure, begun in 2012 with initial investments of over $1 billion in Telekom Austria and $3.4 billion in Dutch group KPN
It was unclear if the meeting of the supervisory board of Austrian state holding company OIAG had the necessary quorum of seven to take a vote on the proposed deal, as at least half of the 14 board members stayed away from the meeting, sources familiar with the matter told Reuters.
Shares in Telekom Austria, which have been buoyed by takeover speculation since Slim's America Movil (AMXL.MX) first acquired a large stake in the company two years ago, slumped almost 5 percent as prospects faded of an imminent offer for the rest of the company.
The agreement envisaged pooling the 28.4 percent held by the OIAG with the 26.4 percent of America Movil in a syndicate where both parties would have to vote in unison on major issues, triggering a joint takeover offer.
The five labor representatives on the OIAG board boycotted the meeting, three sources familiar with the matter told Reuters. One said the chairman was also absent, and the offices of two other board members said they were out of the country.
An OIAG spokesman declined to say how many board members were in attendance on Wednesday or to confirm whether the chairman, Peter Mitterbauer, was present.
A Reuters reporter saw at least four board members arriving for the meeting, but neither Mitterbauer or any of the labor representatives were among them. Mitterbauer's office declined comment.
The meeting, which began at 0700 GMT, was expected to go on into Wednesday evening, potentially giving one of the absent board members time to make an appearance. A few board members were seen by Reuters entering the meeting room after 1600 GMT.
A spokesman for America Movil said the company had no comment for the time being.
Slim's original purchase of his Telekom Austria and KPN stakes took advantage of market valuations seen as cheap at the time, as he sought diversification outside Latin America where regulators are looking askance at his dominant market share in many countries.
Telekom Austria was then battling fierce competition from three other operators in the small Alpine nation, but a consolidation of the market to three carriers was already in view and has subsequently eased price rivalry somewhat.
Slim made an unsolicited offer for the rest of KPN last year and was rebuffed, but the tycoon hoped to avoid a similar fate in Austria, where he courted politicians with promises to safeguard the Austrian headquarters and give the government veto rights.
Following the syndicate agreement, Slim, with deeper pockets than Austria, could then raise his stake either in the course of a takeover or via a 1 billion euro ($1.4 billion) rights issue of new stock, that a source with knowledge of the contract said was envisaged.
The OIAG has said its stake could fall to, but not below, 25 percent. It has declined to commit to keeping pace with Slim.
The OIAG labor representatives were unimpressed with a lack of job guarantees, unclear strategy and absence of any promise of a controlling role for Austria in the agreement text, the source said. "This is no partnership of equals."
The influential head of the Vienna Chamber of Labour released a statement condemning the syndicate contract, which he said would bring only disadvantages for Austria and hand Slim a majority on both the management and supervisory boards.
Telekom Austria's Chief Financial Officer Hans Tschuden had his contract terminated three years early two weeks ago. No reason was given for the decision.
Wednesday is the last day that the OIAG and Slim can agree on the syndicate contract without getting special permission from Austria's Takeover Commission or waiting another year.
Under Austrian stock market rules, the parties had 40 working days from February 24, when America Movil said it could start formal talks on a syndicate, to conclude an agreement.