LONDON, FEBRUARY 4: After a bitter three-month battle, Germany's Mannesmann AG surrendered to Britain's Vodafone AirTouch PLC in a friendly $180.95 billion merger, the biggest deal ever and one likely to reshape the global-telecommunications landscape. The transaction which eclipses even AOL Inc's planned $131 billion acquisition of Time Warner Inc-would create the world's largest mobile-phone operator, with 42.3 million customers in Britain, the US, Germany, Italy, France and a host of other markets.The sheer scale of the union is expected to prompt rival operators to merge, lower wireless rates for customers and hasten the arrival of cell phones that work anywhere in the world.
The transaction will have its most immediate impact in Europe, which is ahead of the US in the development of wireless services and could now see that gap widen. The deal, which marries Britain's leading wireless player with the largest in Germany, is expected to be approved Friday by Mannesmann's supervisory board, people familiar with the situation said.
Vodafone's triumph could have important implications for the takeover landscape, spurring other European and US companies to launch hostile takeovers in Germany, which has never seen a successful hostile deal. "It shows such a thing is really possible here," said Josef Joffe, a foreign-policy specialist in Germany. He added -- the old ways of doing business -- the idea of protecting producers first rather than the consumer -- are still very present, -- in Germany. But underneath, the laws and habits that govern them are churning at a significant pace. On the streets of Germany, though, it was the old ways that were on display. "What's German should stayGerman, argued Gerhard Lemme, a 42-year-old Frankfurt handyman. "After all, if all the good companies get swallowed up, what will we have left?" The accord was hammered out by Vodafone Chief Executive Chris Gent and Mannesmann Chief Executive Klaus Esser in the early hours of Thursday morning, after weeks of pitched battle and a war of words between the two chief executives.
Under the proposed all-stock transaction, Mannesmann holders would receive 58.96 Vodafone shares for each Mannesmann share, valuing Mannesmann at 353 euros ($349.61) a share, these people said. Mannesmann holders would control 49.5% of the combined company while Vodafone shareholders would hold a majority 50.5%, these people said.
The agreement appears to bring to an end the closely watched duel between Messrs. Gent and Esser for control of Mannesmann. Thursday, at a late-night news conference at Mannesmann’s Duesseldorf headquarters, both men were conciliatory. "We are both winners," Gent said.
In explaining why he finally surrendered, Esser said the offer price had increased sufficiently with the rise in Vodafone’s stock.
-- (The Wall Street Journal)
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