UPDATE 2-Telefonica wins Slim's backing for improved E-Plus deal
* Offer includes larger share in combined German business
* America Movil supports new Telefonica offer
AMSTERDAM/MADRID, Aug 26 (Reuters) - Spain's telecom giant Telefonica improved its offer for KPN's German unit E-Plus, winning support from the Dutch telecom group's biggest shareholder, America Movil.
Mexican billionaire Carlos Slim's group, which now owns 29.77 percent of KPN, said it still plans to go ahead with its separate 7.2-billion-euro ($9.65 billion) bid in cash for the remaining shares in the Dutch group it does not already own.
KPN, Telefonica and America Movil said on Monday that the Spanish telecoms company had agreed to pay the equivalent of 8.55 billion euros ($11.46 billion) for E-Plus, compared with its earlier offer of 8.1 billion euros.
KPN will receive 5 billion euros in cash for E-Plus and will get a bigger stake in Telefonica's German business of 20.5 percent, compared with the 17.6 percent previously agreed.
Telefonica will sign an option to buy back 2.9 percent of its subsidiary after a year at a price of 510 million euros.
Winning Slim's support increases the chance that the German deal will go though. People close to the matter said at the time that his company viewed the previous offer as too low and fraught with regulatory risks.
"Positive news, with reduces the uncertainty for the operation following the takeover bid for KPN by America Movil," Spain's Banco Sabadell said in a note to clients on Monday.
Shares in Telefonica rose 0.88 percent at 10.85 euros at the opening of the Madrid stock exchange, while KPN shares were up 2.39 percent at 2.316 euros in Amsterdam.
Pedro Oliveira, analyst at BPI, also said Slim's support increased the odds of the deal getting past the regulator.
"We continue to stress that the operation is subject to regulators' approval and despite the support of America Movil there are still risks for the operation and to the value of the operation," he said in a note.
KPN has so far resisted Slim's move to increase his grip over the Dutch group, and an independent foundation that has the power to block KPN's takeover has expressed concern over the proposed bid.
In a statement on Monday, America Movil said it believed that by acquiring a majority stake in KPN, both companies could benefit from greater operational co-operation and co-ordination.
"By achieving majority ownership, AMX believes it will be able to support KPN to a greater extent with its investment plans in a rapidly changing European environment," the Mexican group said in a statement.
Antitrust experts told Reuters last month Telefonica was likely to persuade regulators to clear its bid for E-Plus by giving up some spectrum and easing the entry of new competitors, a move which could also trigger a phase of consolidation in Europe's packed telecom sector.
Telecom operators have lobbied heavily in recent months for Brussels to take a softer line on mergers, arguing that Europe has too many operators labouring under heavy regulation that saps their ability to invest in networks.