KPN shares fell almost 5% on Friday as investors dumped stock after Mexican billionaire Carlos Slim's telecom group America Movil increased its stake in the Dutch company to 21%, part of a strategy to increase Slim's presence in Europe.
Slim's America Movil, which has already obtained a stake in Telekom Austria, increased its KPN ownership to 21% on Thursday and has said it wants to obtain a maximum of 27.7%.
By keeping below 30%, Slim avoids having to make a bid for the whole of KPN, as Dutch law requires.
"The stake he bought on Thursday is a sledgehammer blow to KPN. His bid is for $10 per KPN share. He can still buy a further 7% on the market," said asset manager Ed Manie of Dutch brokerage and fund management firm Keijser Capital.
"It would not surprise me if he cancels his bid. That's why there's an exodus of KPN investors," said Manie, adding his firm had sold all its KPN shares.
KPN shares fell to a six-week low, losing as much as 6.5%, and traded down 4.5%.
On Thursday, Reuters reported that KPN may unleash a risky "poison pill" defense to stop the bid by Slim, if only to buy time for a side deal with Telefonica that it thinks better values its assets and bolsters its independence.
But the move - handing preference stock to KPN's "Stichting" or foundation that could outvote other shareholders - was fraught with uncertainties and could have backfired through legal challenges by Slim's America Movil or KPN's own shareholders.
(Reporting by Gilbert Kreijger; Editing by David Holmes)