After resisting a hostile takeover attempt by Vodafone AirTouch plc for more than two months, Germany’s Mannesmann AG last week agreed to a revised friendly offer just days shy of the Feb. 7 deadline for Mannesmann shareholders to vote on the hostile bid.
Mannesmann’s supervisory board Friday approved the agreement, and shareholders have until Feb. 17 to accept the offer.
The new all-stock offer, which is valued at more than $175 billion, would be the largest merger in history and would make the new company the world’s fourth-largest company based on market capitalization behind Microsoft Corp., General Electric and Cisco Systems, according to Reuters.
The deal gives Mannesmann 49.5 percent of the combined company. The previous offer would have given Mannesmann 47.2-percent of the company.
Vodafone increased its offer a total of 65 percent from the time it first showed interest in Mannesmann. Vodafone made its first offer in November-a $106 billion bid that Mannesmann rejected. Shortly after, Vodafone announced it would take a new, $128 billion offer directly to Mannesmann’s shareholders.
Mannesmann vigorously defended the hostile attempt, but some key Mannesmann shareholders were said to be favorable to an agreement with Vodafone AirTouch, and an eventual merger was not unexpected.
The combination of Vodafone AirTouch and Mannesmann creates a new question mark in Europe. Mannesmann had been in the process of acquiring Orange plc, the United Kingdom’s third-largest mobile operator, and the combined companies must now divest the Orange holding.
Vodafone AirTouch Chairman Chris Gent said he prefers to divest Orange through a stock distribution to shareholders later this year, according to Reuters. However, speculation is running high that Orange will become a takeover target, with France Telecom and KPN Telecom NV emerging as the most likely bidders for the company.
Vodafone has an impressive track record when it comes to securing the mergers it prizes. The company snatched AirTouch Communications Inc. away from suitor Bell Atlantic Corp., sending a bitter Bell Atlantic home empty-handed. Vodafone later smoothed Bell Atlantic’s ruffled feathers and convinced it to join its wireless interests with those of AirTouch to create a dominant U.S. carrier.
With Mannesmann now in its fold, Vodafone AirTouch has created a powerhouse in Europe. Not including Orange, Mannesmann brings 12.8 million subscribers to Vodafone AirTouch, for a total of 48.3 million equity subscribers worldwide, or about 10 percent of all wireless customers, said Phil Kendall, senior industry analyst at Strategy Analytics in England.
In Western Europe, Vodafone AirTouch will control 33.2 million proportionate subscribers, or 21.5 percent of the region’s total subscriber base, he said. Telecom Italia Mobile will run second to the combined company with 20.4 million subscribers, and Deutsche Telekom will rank third with 14.9 million proportionate subscribers. The combined Vodafone AirTouch/Mannesmann, along with TIM and Deutsche Telekom will control 45 percent of Western Europe’s cellular customers, said Kendall.
Klaus Esser will join Vodafone AirTouch’s board as an executive director, said the companies. In addition, four members of Mannesmann’s supervisory board will be invited to join Vodafone AirTouch’s board.
Vodafone AirTouch agreed not to dispose of the wireline activities of the combined group and to retain existing facilities and activities in Dusseldorf.
