UPDATE 2-KPN launches formal offer for Getronics, shares up

(Adds market comment, updates shares)

AMSTERDAM, Sept 11 (Reuters) - Dutch telecoms group KPN (KPN.AS: Quote, Profile, Research, Stock Buzz) launched its offer for Dutch IT services company Getronics GTN.AS, worth 1.2 billion euros ($1.66 billion) in debt and cash, on Tuesday, with the offer period ending on Oct. 12.

KPN shares were up 3.8 percent at 11.86 euros at 1400 GMT, the top performer of the European DJS telecoms stocks index . Earlier they touched a 7-week high of 11.90 euros after broker Merrill Lynch upgraded its recommendation on the stock.

KPN, which announced on July 30 that it had agreed with the struggling information technology company to buy its shares for 6.25 euros per share, is trying to move from providing communications links to more value-added services in the business market. That values the equity of Getronics at 766 million euros.

The former Dutch telecoms monopoly is also spending an additional 415 million euros on buying back Getronics's outstanding convertible bonds maturing in 2008, 2010 and 2014 as well as preference shares, KPN said in a statement.

In total the deal is worth 1.18 billion euros.

Traders said Merrill Lynch upgraded KPN to "buy" from "neutral" with a price target of 14.25 euros per share.

"KPN is up on a Merrill Lynch upgrade. It's been put on their "focus list"," said asset manager Gert-Jan Geels from Eureffect.

Getronics, whose shares were up 0.65 percent to 6.19 euros, said that it would convene a shareholders meeting on Oct. 2 to explain the KPN offer, which is backed by its management.