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Mannesmann accepts merger with
Vodafone
Fri, Feb 4, 2000, 00:00
 
 
Mannesmann and Voda fone AirTouch last night agreed the world's biggest merger
in a deal worth about $185 billion (€187 billion). Mannesmann chairman Mr Klaus
Esser and Vodafone chief executive Mr Chris Gent, who will lead the new firm, made
the announcement after a seven-hour Mannesmann board meeting. Vodafone is now
offering €350 (£276) a share for the German conglomerate. Mr Gent said Vodafone
would have 50.5 per cent of the new company and Mannesmann 49.5 per cent.
Under the terms of the offer, Mannesmann shareholders will receive 58.96 shares in
the new company for each Mannesmann share they own. This compares with the
final hostile offer from Vodafone of 53.7 new shares, which would have left
Mannesmann shareholders with a 47.2 per cent holding in the new company.
The agreement puts an end to Vodafone's hostile bid for Mannesmann which was to
expire on Monday.
Mr Gent will lead the new group, which will have joint headquarters in Newbury,
England and Dusseldorf. Mr Esser will remain as the Mannesmann chief for five
months and then become a non-executive vice-resident.
Vodafone is already the world mobile telephone leader. But it will now gain huge
access into the European market and the deal will further clear the way for rapid
Internet expansion.
Vodafone's victory marks the first time a foreign company has succeeded with a
hostile assault on a large German company and tells executives globally there are no
longer any no-go areas as European business embarks on a widescale restructuring.
One investment banking adviser to Vodafone said: "Germany's hitherto
unbreachable corporate world has finally been broken and many are going to be
licking their lips."
At $375 billion, the merged group will be Europe's largest publicly-traded company
and the world's largest telecoms group. It will also rank as the fourth largest
company in any industry, behind Microsoft, General Electric and Cisco Systems.
      
As the undisputed champion of the European telecommunications industry, it will
also stand at the centre of the continent's wireless Internet revolution. With personal
computer use much lower than in the US, the mobile phone is now seen as the key
method by which Europeans will come to access the Internet.
Mr Gent finally convinced Mannesmann after sealing a deal with Vivendi of France
last Sunday to set up Europe-wide Internet access for personal computers,
televisions and telephones.
This deal creates a dominant force in the global wireless communication business
with about 10 per cent of the current global market.
Formed only in 1985, Vodafone's growth by acquisition has raised the ante for
competitors and helped accelerate the pace of corporate change.
Mannesmann last October triggered Vodafone's hostile takeover bid by taking over
another British telecoms group, Orange, which the new company will now almost
certainly have to sell in line with British competition regulations.
Over the course of the threemonth battle it became clear that just enough investors
on both sides of the Atlantic wanted to see the takeover happen.
Institutional shareholders were won over by the logic of the deal, creating a telecoms
giant with global reach which could be at the forefront of the coming convergence of
the Internet and mobile communications.

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