Introduction

A merger is when two or more different entities combine their forces to form one common entity.
An acquisition relates to a process where a takeover of one entity by another entity. The main aim of
making these decisions by entities is to ensure that there is synergy in the operations to ensure that
they are improving, becoming more competitive, and increasing their market share. The merger of
Vodafone and Mannesmann has been analyzed below.

Vodafone and Mannesmann

Vodafone is the leading multinational Telecommunication entity, with its headquarters being based
in Europe. The entity has majored more in Europe, America, and Japan in its cellular telephone
operation with more than a 165million subscribers and annual sales of $64billions.The major success
of the entity has been made via the increased merger of the entity with other global firms like Air
Touch Communications and the takeover of Mannesmann. The entity has been in operation since
1985 as it started as a joint venture of the Racal Electronics and Millicom Launch joint venture in
mobile telecommunications and has grown to be one of the most significant entities in the
telecommunication sector globally. The entity has grown over the years through mergers and
acquisitions to achieve its current levels in the market. The entity has different subsidiaries in
different nations all over the world. The entity operates in more than 30 countries worldwide with
over 38 partner networks globally. The entity offers different products, including money transfer
services, voice calls, data calls, internet services, and sell of mobile-related accessories.

Mannesmann was initially established to manufacture steel pipes in Germany in 1890 but grew into
different products later on. The entity grew into sectors like mechanical and electrical engineering,
automotive, and telecommunications. The entity grew more in the telecommunication sector and
had revenues of 23.27billion Euros in 2000 with 130,860 employees. The entity was acquired by
Vodafone in the year 2000 and hence ceased operations in the other sectors and now lives in the
steel industry and manufactures steel tubes and pipes.

Merger of Vodafoene and Mannesmann

The merger for the two entities was aimed at building a more potent synergy in the
telecommunication sector.This was aimed at consolidating Vodafone Air Touch position in Europe.
Mannesmann had a controlling stake in atleast the European nations. Hence, the merger was to
increase their dominancy in Europe for any wireless carrier. The merger was valued at a $181.4
Billion share deal, and the board members and shareholders agreed on a 49.5% for Mannesmann
with 59.96 shares of Vodafone for each Mannesmann share. The merger was via financial advice
from Goldman Sachs. Vodafone paid 98 Billion Euros for the different assets acquired, and Esser
joined the entity as an executive director ata Vodafone and four of the other members joined the
board of Vodafone. The main aim of the merger was to increase global subscribers and hence be
more competitive in the telecommunication sector.The financial advisor Goldman Sachs was tasked
with serving as a jount arranger of a $30 Billion Euro-bank loan,acting as a joint book runner on
Vodafones $5.25billion global bond and executing $5.1billion trade in Vodafone.Goldman Sachs was
identified as ten financiual advisor to Vodafone while Mannesmann had Morgan Stanley and Merill
Lynch investment banks as their advisors.

Results of the merger

The merger resulted into both short term and long term effects.This were attribute to both the
initaila cost of the merger and the increase market control by the acquiring entity Vodafone.The =re
were both short and long tem effects which arose like an immediate drop in Vodafones stock as
there was fear that the dilutions nad bemnefits from the synergies would not present themselves for
some time. This made most of the investors to lose some trust on their traded shares in the market.
There were strikes by the Mannesmann staff who protested the takeover and hence increased
criticisms from the Germany politicians too and the trade unions.The enity at first incurred huge
losses before they could settle and be strong in the market resulting from the restructuring
process.This was through ensurimng that the different documents for regiustrationnand movement
to new offices and equipping the same led to more funds being spend in both the acquisition of
assets and also compensation to their advisors and the staff before the merger.

There were however long term benefits like Vodafone becoming the global mobile player in the
European markets and the world at large. This led to an increase in their growth in revenues
depending on the increased number of subscribers.The increase in the region coverage will mean
that there was an increase in the customer sizes and subscribers.The demand for thenir accessories
and services rose and hence leading to an increase in the sales and hence their revenues too.

There was an increase in diversification of skills through acquiring different staff with diversified
cultural and technical skills too. This led to improved performance in Vodafone as they borrowed
more from the takeovers. The takeovers also led to shifting of their previously existing customers
whom they knew their test and preferences nad hence leading to improved products and services to
meet the existing needs in the market. Different staff in then firm led to improved technological
advancement which led to more of their services being provided using the modern technology and
hence creating a better services provision to their customers and increasing their competitiveness in
the economy as compared to before. The merger has also led tobetter utilization of human
resources whereby there has been a better process sof ensureing that the best and competitive staff
are hired.Thsi has led to the improved relations in the firm as most of the staff work as a team and
all thenir different duties anad roles have been clearely set.There has been redudction imn the
duplication of work among the staff hence creating an environmenet which allows work life balance
and hence creation of motivation to the different staff working in the entity

There was an increase in the money circulation in the economy after opening up of their
offices.Vodafone was in a high demand of the base currency for the debt financing hence had toe
xchange its currency to acquire the Germany currency.this led to increasing money cu=irculation in
the economy and more earning on then exchange differences in the market.The exchange of the
ci=urrency led to reduction of expenses by most of the people going to thje Germany central bank to
exchange the same which was quite economical to both entitites.The circulation of the money in the
economy led to opening up of different operational entities in the market.There haave been creation
of emeployment opportyunities for the different staff who are involved in the communication sector
control in the call centres,customner service scentres and the ones monoitoring the money transfer
on the different platforms.Creation of these opportunities leads to economic development and
improvement in the living standards in the society which lead to better performamces in the
Germany economies.There has been increased competitiveness of the Vodafone after the merger as
their markets dominance meant that there would be lesser competition from the existing
competitors in the market.This was made more stonger by the fact that the Vodafone Company was
able to acquire more skilled personnels and a higher dominance in the market.They were bale to
lowere prices of some of their services as a strategy of venturing into more markets and hemce led
to more competitiveness.The lowering of the prices in their services made them acquire more entity
and hence penetrated to Asia and African continent too.This hence led to an increase in their
number of the subscribers.
Conclusion

The merger between Vodafone and Mannesmann has been on ethe historically largest merger in the
world and has led to different benefits in the world at large.,Despite the few challenges existing, the
firm has been in a postion to improve on their performamce and hence imporoved revenues and
increase in their potential for more growth.It is hence advisable that for the different entities which
are in a position of beoing in a ,erger or take over to embrace the same for more improved
performmances.