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    December 2000

    Martin Marinschek, Student ID 9803246


    This paper summarizes the proceedings of the largest merger in the history ofthe telecommunication business, including the two players Vodafone and Mannes-mann.

    Analyzing the history of the two companies, the reasons for the merger, themerger itself and the outcome of the takeover, as well as the impacts on society,economy and legislative are the major concerns.

    Along the way, a short description of the acting persons shall be given, andthe environment of the merger shall be shown as appropriate for a complete descrip-tion.

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    Table Of Contents

    1 An Introduction To The Case ___________________________ 31.1 Mannesmann Before The Merger _____________________ 31.1.1 It All Began With Tubes _________________________________ 3

    1.1.2 A Company In Change __________________________________ 31.2 Vodafone Before The Merger ________________________ 4

    1.2.1 A Pure Telecommunication Player _________________________ 41.2.2 The Merger Vodafone Airtouch __________________________ 4

    1.3 Compare The Price: Mannesmann And Vodafone _________ 51.4 The Opponents: Klaus Esser And Chris Gent ____________ 8

    1.4.1 Klaus Esser ___________________________________________ 81.4.2 Chris Gent ____________________________________________ 8

    2 The Proceedings Of The Merger _________________________ 92.1 Mannesmann Wants Orange ________________________ 92.2 Vodafone Wants Mannesmann _______________________ 92.3 Mannesmann Fights With All Means __________________ 92.4 Vivendi: The White Knight? ________________________ 102.5 Finally Vodafone Wins ____________________________ 11

    3 The Future: Bright And Sparkling? ______________________ 113.1 Vodafone Mannesmann: The Biggest Player __________ 113.2 Creating A New Brand: Forget About Mannesmann ____ 133.3 The Impacts On Economy And Society ________________ 13

    3.3.1 Impacts On Europes Economy __________________________ 133.3.2 Impact On The Exchange Rate Of Currencies _______________ 143.3.3 Impact On Legislation _________________________________ 14

    3.4 Two Winners Are Clear ___________________________ 15

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    1 An Introduction To The CaseThis chapter will tell about the essential information necessary to understand

    why the merger between Mannesmann and Vodafone could happen, and why a

    company like Mannesmann, one of the fastest growing German companies, was atakeover candidate.

    1.1 Mannesmann Before The MergerThe foundations of Mannesmann and its history are the contents of this chap-


    1.1.1 It All Began With TubesIt all began with tubes: in 1890 the "Deutsch-sterreichische Mannes-

    mannrhren-Werke Aktiengesellschaft" was founded, due to the fact that an innova-tive process of manufacturing seamless tubes a lot cheaper caused a huge spark inthe demand for such tubes.(Mannesmann. 2000. An Outline of Mannesmann History of the Mannesmann Group.)

    Later Mannesmann expanded its concept to play an important role in the fieldof Steel Engineering and the Automotive Industry as well. In 1990, it was a widelydiversified group as the company history quotes.

    In 1990, the hundredth year in the history of the company, Mannesmann isa widely diversified technological Group that successfully operates internationally in

    the sectors of mechanical engineering and plant construction, drive and control sys-tems technology, electrical engineering and electronics, vehicle engineering as wellas in the production and trading of the original product of steel tubing. This tradi-tional sector, the Group nucleus, provides only around 28% of the sales in 1990 andthe trend is steadily sinking (Mannesmann. 2000. An Outline of Mannesmann History of the Mannesmann Group.)

    1.1.2 A Company In ChangeFinally, in 1990, the company bought the first licence for a private mobile tele-

    communications network in Germany, called its network D2 and rapidly grew to bethe leader of the mobile communication business in Germany. (Mannesmann. 2000.An Outline of Mannesmann History ofthe Mannesmann Group.)

    The company was still active in other sectors as well, but these sectors startedto be less important over time, the tube production sector was highly deficitary, thestill very well running engineering part was not the only decisive part of the annualturnovers anymore as in 1999 the sales of telecommunication products were morethan a third of the complete turnover. (Mannesmann. 2000. Mannesmann at aGlance.)

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    Klaus Esser, the CEO of the company, was in the process of selling the tubedepartment and initiating an IPO for the engineering part as well, reducing the scopeof Mannesmanns business to a pure telecommunication one. (Esser 2000)

    In the course of action, he was searching for a partner in the UK, a market

    where Mannesmann was underrepresented at this time. His strategy regarding theinternet and wireless phone calls over wires compared best to Orange, the largestconcurrent of Vodafone, and he agreed with Hutchinson Whampoa, Oranges largestshareholder on buying a majority stake in the company. (Walker 2000)

    In the proceedings the share price dropped, this opened up the vulnerabilityof the company: its low market capitalization in comparison to the other huge Tel-Cos.

    1.2 Vodafone Before The MergerThe history of Vodafone is a shorter one than Mannesmanns, as can be seen

    from the next chapter.

    1.2.1 A Pure Telecommunication PlayerThe following history is taken from the companys history that can be read in

    Vodafone, 2000, Company History.

    In 1982, Racal Radio Group took part in the bid for the first private mobile tel-ecommunications license in the UK. It succeeded, and rapidly developed its customerbase. The telecommunication part of Racals business was soon to be called Voda-

    fone.In 1991, Racal and Vodafone demerged, and Vodafone emerged as a separate

    legal entity, then with a customer base of 697,000.

    The following years helped Vodafone to grow into an international company, aglobal player, with agreements in most of the European countries and in other partsof the world as well (especially Hong Kong, Netherlands, Germany and France).

    Finally the last step to be an important global player was set: The merger withAirtouch provided Vodafone with the necessary access to the US market to call itselfa real international company.

    1.2.2 The Merger Vodafone AirtouchThis merger, as said before, was the last step to a truly international compa-

    ny, set by Vodafone in 1999 and leaving the world unsure about the future of theemerging telecom giant.

    It sounds fanciful. A virtually unknown British company beats two US giantsin a battle for an American leader in one of the world's fastest growing businesses topull off Europe's largest transatlantic takeover. But it's true. Vodafone Group PLCoutbid Bell Atlantic and scared off MCI-WorldCom to snare AirTouch Communica-

    tions, the San Francisco-based cellular phone services company, in a $62 billion deal

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    that overshadowed the Daimler-Chrysler and BP-Amoco transactions of 1998.(Barnard B. 1999. Vodafone Air Touch.)

    In July 1999 the merger between Vodafone and Airtouch was completed(April, C. 1999. Vodafone, Airtouch complete Merger.)

    And Chris Gent did not have enough: His aims at this point were to be amongthe top ten of the largest companies worldwide and to have a subscriber base of 40mio. people in 2003. Further acquisitions had to follow to achieve this goal. ( BarnardB. 1999. Vodafone Air Touch.)

    1.3 Compare The Price: Mannesmann And VodafoneMannesmann shares were worth 143 at the time of the proposed merger be-

    tween Mannesmann and Vodafone, with a volume of 494 mio. shares on the marketwhich sums up to a market capitalization of around 70 bio. . The customer base of

    Mannesmann was around 36 mio. at the same time. (Mannesmann. 2000. Report ofthe Executive Board. and Vodafone. 2000. Creating Europes Global Telecoms Lead-er.)

    The following chart illustrates the valuation of Mannesmann until the Novem-ber of 1999, the sharp incline in valuation due to the talkover offer by Vodafone (thepeek in February is exactly the takeover date). The sharp decline of the stock pricethereafter is not relevant: There are 2% of the Mannesmann shares left in the mar-ket, they are still being traded, but with a lot smaller liquidity and they graduallydecrease in price.

    Fig. 1: Stock price of Mannesmann ADRs on the NASDAQ for the last two years., Quotes & Charts for symbol MNNSY

    For Vodafone, the number of customers was at 30 mio. (if linear interpolationbetween the customer base of 1999 and 2000 is used) and the market capitalization

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    was at more than 150 bio. . More than two times as much as Mannesmann, at thesame numbers of customers, still not accounting for the other business of Mannes-mann in addition. (Vodafone. 2000. Creating Europes Global Telecoms Leader. andVodafone. 2000. Company History.)

    The interesting fact about the following Vodafone chart is the sharp increasein price from the November 1999 to the February of 2000 (much like the Mannes-mann chart). In general, when a big merger happens, the company which takes overhas to face a decline in stock valuation. This unusual behavior in the case ofMannesmann and Vodafone made the takeover possible.

    Fig. 2: Stock price of Vodafone ADRs on the NYSE for the last two years., Quotes & Charts for symbol VOD

    Mannesmann was therefore a cheap company compared to Vodafone, maybedue to the fact that it was a mixed conglomerate of different types of engineeringand that it just had an additional telecommunication business different to a puretelecommunication player like Vodafone. Shares of pure telecommunication playersseem to be weighing more on the market. (Anonymous. November 1999. Die wollenuns stoppen.)

    Finally a comparison of the Mannesmann and the Vodafone stock chart over

    the last two years. Here it can be seen that the Mannesmann stock has a lot sharperincrease during merger talks, and that the development of the stocks before themerger talks where completely the same. That was not always like that, the stockchart thereafter will tell a different story.

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    Fig. 3: Comparison of the stock prices of Mannesmann and Vodafone over the last twoyears. Source:, Quotes & Charts for symbol MNNSY in comparison tosymbol VOD

    If we look at the share price of two years from January 1997 to December1999, we will see that a difference between the companies is eminent. At some timein history, the valuation must have gone different ways, and the outcome is a Voda-fone stock valuation that was (at the point of the merger talks) far higher thanMannesmanns.

    Fig. 4: Comparison of the stock prices of Mannesmann and Vodafone over the last threeyears. Source:, Creating Europes Global Telecoms Leader

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    Fig. 5: KlausEsser,letter to ourshareholders

    1.4 The Opponents: Klaus Esser And Chris GentAnd now some words to the human players, who they are and what they

    stood for in the growing telecommunication business and in respect to the merger.

    1.4.1 Klaus EsserThe lawyer who took his doctorate degree is being called an

    eloquent, but quiet, passionate, but bookish and deeply private person.(Anonymous. 2000. Face value: Mannesmann's dogged defender.)

    He had been working for Mannesmann for more than 20 years,till he had to quit in June 2000 due to the merger.

    In 1994 he took the leading of the finance department ofMannesmann to keep this position for another five years, when in 1999

    he was finally appointed to be CEO of Mannesmann. A classical career,as one might say. (Preissner A., Nlting A. 1999.Der Zwei-Teiler.)

    His strategies for Mannesmann were based on a mixed wiredand wireless telecommunication business, along with a strong footprintin the newly emerging internet platform which was ready to be

    launched 2 months after the proposed merger.

    1.4.2 Chris GentOne of four brothers, he grew up in London. His father was a

    sailor and died when Gent was a teenager. Gent decided againstuniversity and immediately took a job as a trainee at Britains Na-tional Westminster Bank. He was politically interested and soon be-came chairman of the Young Conservatives.

    With his interest in Cricket, he shares a major hobby and be-friended with John Major, former Prime Minister of the UK. Thisfriendship came in handy when he decided, after 14 years in thecomputer business, to join Vodafone in 1985. He quickly rosethrough the ranks of the company.

    Gent is publicity shy and a very private person, still he hascome to be one of the most important managers of the telecommu-

    nication business. (Anonymous. 2000. Chris Gent.)

    His objectives for Vodafone (and Mannesmann) were not much different thanEssers: It did not look like he was on the internet track right from the beginning,though and it was clear that if he took over Mannesmann, he would demerge thewired parts of the telecommunication business and remain with the wireless ones.

    Fig. 6: ChrisGent, Annual

    Review Of1999

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    2 The Proceedings Of The MergerA complete description of the merger is given in this chapter, along with some

    interesting facts about the participating companies and persons.

    2.1 Mannesmann Wants OrangeMannesmann, one of the biggest telecommunication companies in Continental

    Europe, wanted to expand its footprint to the UK as well. That is the reason whyMannesmann hired Merril Lynch to advise in the question of acquiring Orange inAutumn 1998, but Hutchinson Whampoa, Oranges major shareholder did not wantto sell the company for a whole year.

    Klaus Esser, CEO of Mannesmann, finally succeeded: in the Autumn 1999Hutchinson agreed with selling Orange, and on October the 20th Esser bid for the

    company.A peculiar situation for Vodafone: Mannesmann was going to be a major play-

    er in all European markets, whereas Vodafone would just be a minority stakeholderin all markets but the UK: something the Vodafone strategists could not agree with.(Walker M. 2000. The bid that couldn't fail.)

    2.2 Vodafone Wants MannesmannWhen the idea emerged is not clear, but on October 22nd Vodafone hired

    Goldman Sachs and Warburg Dillon Read to help with the possible options regarding

    Mannesmann, and Vodafone moved quickly.It was clear that the merger between Mannesmann and Orange could not be

    broken, it was a done deal, so the only possibility left open for Vodafone was to bidfor Mannesmann itself.

    Political interest in the case would be huge, that the company knew, but it setall reservations aside and bid on November 14th: a friendly takeover, valuingMannesmann at 204 a share.

    Esser and his company declined, and the hostile bid was launched on Novem-ber 19th. An all stock offer, valuing the Mannesmann stock at 240 a share. (Walker

    M. 2000. The bid that couldn't fail.)

    2.3 Mannesmann Fights With All MeansGoldman, Sachs & Co. played an ambivalent role in the battle: first helping to

    sell Orange plc. from Hutchinson Whampoa to Mannesmann and then helping Voda-fone to takeover Mannesmann did actually raise some questions about possible con-flicts of interest. Very early in the process of the takeover, Mannesmann filed a law-suit with Goldman on this issue, but due to problems with the provided evidence thelawsuit was cancelled pretty soon. (Reed S. 2000. The Wizards of Telecom.)

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    Some observers called that step of Mannesmann clumsy (Walker M. 2000.The bid that couldn't fail.) but the principal question of the conflict of interest re-mained open.

    The next step was little better, the observer recalls: Its [Mannesmanns]

    first presentation to analysts in London was a chaotic affair: a room prepared for 30analysts filled up with 150, and German executives bored them for four hours withrambling, laborious presentations. Vodafone's bankers found that they had thefirst month's media airtime virtually to themselves: "That gave us a momentumwhich we never lost," says Finegold. (Walker M. 2000. The bid that couldn't fail.)

    As the takeover of Orange was still not completed, Mannesmann was not ableto give out all the information and take all steps that should have been taken at thistime. Esser, who himself had lead the takeover agreements with Orange, had slept14 hours in 9 days and had no time to act appropriate.

    Here the different styles of leading the company showed up: Esser, a leaderwho was not able to delegate much of his competence had to take all steps himself,Vodafone leader Gent had a staff of well trained people who he trusted much andhad given them far reaching decision making competence. (Walker M. 2000. The bidthat couldn't fail.)

    Finally, the most potent escape plan for Mannesmann was triggered: to find awhite knight which would make it impossible for Vodafone to take over Mannes-mann, due to the size of the company thereafter.

    2.4 Vivendi: The White Knight?The search for a possible white knight is short: Vivendi, a France telecom

    business offers a lot of interesting opportunities, and in the week before years endthe talks begin.

    Vivendi played hardball in the talks, though, and so Mannesmann executiveshad to pose themselves the question if the takeover of Vivendi was economicallyjustified or just a plain act of defense.

    Jean Paul Messier, CEO of Vivendi, had been leading talks with both

    Mannesmann and Vodafone about a strategic alliance before the bid of Vodafone forMannesmann. He is now the person who might decide about success of the twoplayers, and knows that he can make something of that fact.

    He is in talks with both parties still: while he talks with Mannesmann about apossible merger under terms in which Vivendi would get a third of the combinedentity and the headquarters would be in Paris and Duesseldorf.

    Vivendi and Mannesmann were close: Vivendi wanted 36% of the combinedcorporation, Mannesmann wanted to offer 34% to the French company. A differencewhich should have been possible to overcome, but the history proved different.

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    What was the missing element, the missing link in the merger talks? The ob-server says: it was the missing participation of Klaus Esser, the missing commitmentof him to the merger that let the negotiations break down.

    On 23rd of January, the situation was clear: The negotiations of Mannesmann

    had stopped, Vodafone would be the partner of Vivendi in an internet agreementthat would be led both by Vodafone and Vivendi at a 50% stake (while Vodafonebrought 75% of the customers into the agreement) and Vodafone would sell to Vi-vendi a 7% stake of Cegetel, making Vivendi to the controlling stakeholder of theFrench mobile phone company.

    All this under the condition that Vodafone wins Mannesmann and the mergeris carried through. (Walker M. 2000. The bid that couldn't fail.)

    2.5 Finally Vodafone WinsThe market reacts positive to the Vivendi Vodafone deal, and this reaction

    finally breaks the resistance of Mannesmann. Klaus Esser, who always believed thatif his shareholders would give him another year, Mannesmann could easily outperfomVodafone and at the end of the year a merger would possibly be a merger in favor ofMannesmann, had to retreat. All he could do in the end was make the deal as posi-tive for his shareholders as possible.

    Says Walker: On February 2, with the hostile bid worth nearly Euro 350 perMannesmann share, Esser picked up the phone and asked Gent to come to Dussel-dorf that night. Over the Rhine, the white Bag was flying. (Walker M. 2000. The bidthat couldn't fail.)

    It has happened (Anonymous. 2000. Linklaters helps Vodafone and Mannes-mann finally tie the knot.): On February 3rd 2000 the companys agree on the takeo-ver, Mannesmanns shareholders receive 49.5% of the combined entity.

    3 The Future: Bright And Sparkling?A merger in this huge size as with Mannesmann and Vodafone can be a posi-

    tive thing for the combined entity, but if the corporate cultures do not go togetherwell or the promised growth does not step in, leaving the hefty premium paid with-out reasons huge amounts of values can be destroyed in takeovers.

    3.1 VodafoneMannesmann: The Biggest PlayerThe question about international mergers and acquisitions always is a question

    about the success of giving the merged company a combined corporate culture. Abig question this is, in regard of the merger presented here, due to the fact that thetakeover was unfriendly and the history of Mannesmann dates a long way back: it ishard to extinguish a history like that without offering some incentives for the em-ployees. (Ryan V. 2000. Gent gets his man (Nesmann).)

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    Other questions are the legal implications of the deal: today it looks like themerger has been planned thoroughly and carefully and the European Union decidedit will not spoil the deal if Orange is demerged from Mannesmann in the process.Vodafone will dispose of other - especially minority - stakes as well. That is neces-sary for reducing the huge pile of debt that was created by the merger. (Donegan M.

    2000. Done deal, but what now?.)Additionally a change in strategy has occurred: Mannesmanns Klaus Esser

    wanted to be a wireless play, but with wire components as well, Chris Gent wantsthe merged entity to be a pure wireless one. That gives room to dispose of otherbusiness units of former Mannesmann, like Arctel and Infostrada.

    It's going to be interesting to see how Gent's pure wireless play will followthrough in Mannesmann,' said Brian Condom director of the technology group atClose Brothers Corporate Finance in London. Some of the challenges facing Vodafoneinclude the legalities of changing the structure of Mannesmann as well as winning

    approval from employees. "The biggest risk now is getting all of the legal issuescorrected, as in the disposal of Orange. With German legislation, it's not easy todismantle a company" said Falk Miller-Veerse, European research manager forDurlacher. Another big issue is getting the trust of the people. It [Vodafone] willneed to do a lot of internal marketing for this. It will want to keep the companyculture in place and keep German representation on the board. (Donegan M.2000. Done deal, but what now?.)

    The prospect of the merged Vodafone - Mannesmann seems to be promising.The currently released numbers show that Vodafone is on track, and that it beats isown forecasts as always.

    According to Anonymous, 2000, Strong results confrm Vodafone's standing as classact, Vodafones Ebitda rose at a rate of 24%, revenues at a rate of 32%. That ishigher than expected by the consensus estimate and is a sign for a healthy develop-ment of the company.

    Additionally Vodafone is one of the companies with the highest credit quality in itssector and is therefore not restrained from further acquisitions by financial problems,in contrast to many of its peers in the market.

    Said Lehman's Martin: "Vodafone has a clear strategy and strong manage-ment. They also have a very good high end growth outlook, good geographical di-

    versification and strong financial flexibility Vodafone's balance sheet is underlever-aged. We would expect the management to start spending in higher risk areas suchas Asia and Latin America. Nonetheless we expect them to structure future acquisi-tions in such a way that their ratings are not affected (Anonymous. 2000. Strongresults confrm Vodafone's standing as class act.)

    The easiest way to judge a merged entity like this is to look at its contrahents:British Telecom, example given. The British Telecom faces problems like reducedprofitability, possible layoffs and enhanced competition. BT has not taken any stepsyet to restructure its business and to become a major player in the internet econo-my. Bad news for BT, good news for Vodafone who is the largest opponent of BT in

    the UK. (Anonymous. 2000. BT bucks the trend.)

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    Still there is this one big issue: Did Vodafone overpay for Mannesmann? Voda-fone put US$ 12,400 on the table for each mobile phone customer of Mannesmann.While some might say this is overpaid by a lot the question is how the payment wasexecuted: The payment was done by giving away highly valued Vodafone stock thatitself could be called overvalued. So Chris Gent probably did the right thing, there is

    still the question if the global strategy he plans will work out. (Anonymous. 2000.What's a Cell-Phone User Worth?.)

    3.2 Creating A New Brand: Forget About MannesmannVodafone wants the name Vodafone on its products: forget about the name

    Mannesmann. Like Coca-Cola or Mars, Vodafone should be known globally, that isthe intention of the companies management. (Rosier B., Poppy B. 2000.Vodafonerecruits senior Coke chief.)

    Thomas Geitner, Vodafone Group's Executive Board Director responsible forglobal branding, said: "The appointment of our first Pan European media planningagency is part of our strategy to establish a strong global brand and position our-selves as the world's leading mobile multimedia company. (Vodafone. 2000. Vo-dafone appoints Pan European Media Planning Agency.)

    In the proceedings, the name Mannesmann, that was not a very attractivebrand name anyway, as it did not sound progressive and active enough, will probablyvanish.

    3.3 The Impacts On Economy And SocietyA merger like the one described in this paper has caused by the volume of

    the transactions of course impacts on the economy of a society, furthermore, socialquestions and legislative questions arise alike.

    3.3.1 Impacts On Europes EconomyEuropes companies are now takeover candidates, that is the essential out-

    come of the Mannesmann Vodafone deal. Vodafone, though being a British com-pany with an Anglo - American corporate culture achieved the previously unbelieva-ble: an unfriendly takeover of a continental Europe company in this huge size.(Hanes K. March 2000. Up Front.)

    The doors are now flung open and the threat of political interference in mer-gers like that has certainly been decreased. If not even in a merger of this size theGerman government intervenes, then there should not be any problems anymore toenter the European corporate offices through the backdoors provided by capital(Hanes K. March 2000. Up Front.)

    It's no great surprise that the transaction has happened - though perhaps itis remarkable that the first such deal should be so politically charged and so large -but it does usher in a new set of possibilities for acquisitive corporates. Vodafone's

    victory signals that even Mannesmann, a dynamic and successful company head-

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    quartered in Europe's supposed economic powerhouse of Germany, can be boughtagainst its will by a foreign competitor. Political objections and grassroots opposition,even those that have more to do with national pride than financial clout, are notinsurmountable impediments to a hostile deal. (Anonymous. 2000. Breaking thetakeover taboo.)

    Not even by a bad press the hostile take-over could be prevented: that is an-other lection to be learned by political interveners in all countries who hope to getthe public opinion on their side by influencing the press in their direction. (Anony-mous. 2000. Breaking the takeover taboo.)

    3.3.2 Impact On The Exchange Rate Of CurrenciesIn previous times, currency traders where exclusively looking on the actions of

    the international central banks. If they increase interests, demand in the currencywill increase, if they lower interest rates, demand in the currency will decrease.

    Nowadays, in days of mergers in the size of Mannesmann and Vodafone, thegame has changed: The traders do not only look on central banks anymore, but alsoon the economical activity regarding acquisitions and mergers. If Vodafone buysMannesmann it needs a huge pile of new debt to finance the acquisition, thereforedemand in the currency increases.

    Currency rates are changed by the possibility and the execution of a mergerlike Mannesmann and Vodafone, in this case raising the price of the against theUS$ by two cents. If the Mannesmann Vodafone deal opened the door for otheracquisitions, that would mean that the value of the European currency in respect to

    the US$ could change drastically. (Reed S. 2000. The Currency Game Has Brand-New Rules.)

    3.3.3 Impact On LegislationDisclosure Practices, political intervention and investor relations are the main

    point were critical voices are emerging regarding the Continental European businesspractice in general and the German one particularly in comparison to the US.

    It remains fact that more than 90% of US investors agree on the pointsabove. To lure money into the Continental European market the legislative has toact. (Franco T. 2000. News Feature: Politics Fails to Taint German Equities.)

    Additionally there is to say that the takeover codes in Continental Europe arenot very sophisticated. In Europe, it is possible to take over a company without offi-cially bidding for it like it happened with LVMH, a luxury-goods firm, and France'sPinault group taking a third each of Gucci. In Italy, Olivetti made a bid for TelekomItalia without including minority stake holders in the process: they were left out, theydid not receive any offers. (Anonymous. 1999. Finance and economics: Barriers toentry.)

    All of these practices would have been impossible under Britain's long-established non-statutory takeover code. It has clear rules about the level of share-

    holdings above which a general offer must be made for all of a company's shares

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    (30%), and above which a bidder has control (50%). Strict rules about trading in thebidder's or target's shares prevent the creation of false markets. And minority share-holders are protected by provisions insisting that they must be treated equally-interms of price and information. Moreover, in Britain, companies must observe a stricttakeover timetable, which, unless concerns about competition cause delays, should

    limit bids to 6o days. (Anonymous. 1999. Finance and economics: Barriers toentry.)

    Germany is now on the way to adopt a new corporate law, with a strongerregulation of take overs. The new law is now in the state of a discussion draft, andthe major points are the following:

    shareholders of the same class must be treated equally the shareholders of the target company must have enough time and

    must be provided with enough information to decide if they want to ac-cept the takeover bid

    it is forbidden to create false markets by the trading in shares of bidderand target

    the bidder must have enough funding available at the time of the an-nouncement of the bidding and

    a takeover bid must not restrict a target company in its ordinary busi-ness activities for more than a reasonable period of time.

    This proposal sounds like a workable implementation of takeover rules, and the fu-ture will show if it works to make future takeovers more predictable and less vicious

    than the VodafoneMannesmann one. (Krause H. September 2000. Germany re-acts to Vodafone challenge with new takeover law. International Financial Law Re-view, London.)

    3.4 Two Winners Are ClearTwo winners are clear: Chris Gent and Klaus Esser, CEO and former CEO of

    Vodafone and Mannesmann.

    Chris Gent receives 5 mio. British pounds in cash and another 5 mio. in stockfor his successful completion of the merger (Anonymous. 2000. Leaders: Vodafone's

    folly.), Klaus Esser 60 mio. German marks as a replacement for the loss of powerand influence (Anonymous. 2000.IG Metall kritisiert 60-Millionen-Mark-Prmie frMannesmann-Chef Klaus Esser.).

    Questionable remains the height of these sums, especially as the benefits ofthis merger have not completely been shown until now.

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    Martin Marinschek, 9803246 Mannesmann vs. Vodafone page 16 of 17


    Anonymous. December 1999. Finance and economics: Barriers to entry. The Econ-omist, London.

    Anonymous. February 2000. Vodafone makes depressing call. Euroweek, London.

    Anonymous. February 2000. What's a Cell-Phone User Worth?. Business Week,New York.

    Anonymous. January 2000. Face value: Mannesmann's dogged defender. TheEconomist; London.

    Anonymous. January 2000. Vodafone sets date for Mannesmann bid. CorporateFinance, London.

    Anonymous. July 2000. Leaders: Vodafone's folly. The Economist, London.

    Anonymous. June 2000. Chris Gent. Business Week, New York.

    Anonymous. March 2000. Breaking the takeover taboo. Corporate Finance, London

    Anonymous. March 2000. BT bucks the trend. Telecommunications, Decham.

    Anonymous. March 2000. Linklaters helps Vodafone and Mannesmann finally tie theknot. International Tax Review, London.

    Anonymous. May 2000.IG Metall kritisiert 60-Millionen-Mark-Prmie frMannesmann-Chef Klaus Esser.

    Anonymous. May 2000. Jumbo clubs, low pricing chosen by BT, Vodafone. Eu-roweek, London.

    Anonymous. November 1999.Die wollen uns stoppen. Der Spiegel.,1518,54530,00.html

    Anonymous. November 2000. Strong results confirm Vodafone's standing as classact. Euroweek, London.

    April, C. July 1999. Vodafone, Airtouch complete Merger. Infoworld, Framingham.

    Barnard B. April 1999. Vodafone Air Touch. Europe, Washington.

    Capell K., Dawley H., Fairlamb D. February 2000. Chris Gent Is Already Looking

    Beyond Mannesmann. Business Week, New York.Donegan M. March 2000. Done deal, but what now?. Telecommunications, Decham

    Esser K. 12/01/2000. Letter to Our Shareholders.

    Franco T. February 2000.News Feature: Politics Fails to Taint German Equities.Investor Relations Business, New York.

    Hanes K. March 2000. Up Front. Global Finance, New York

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    Martin Marinschek, 9803246 Mannesmann vs. Vodafone page 17 of 17

    Kleinman M. November 2000. Vodafone severs link with air miles to focus on deals.Marketing, London.

    Mannesmann. 12/01/2000. An Outline of Mannesmann History of the Mannes-mann Group. 12/01/2000. Mannesmann at a Glance.

    Mannesmann. 12/01/2000. Report of the Executive Board.

    Preissner A., Nlting A. November 1999. Der Zwei-Teiler. manager magazin.,1153,48148,00.html

    Reed S. February 2000. The Currency Game Has Brand-New Rules. Business Week,

    New York.Reed S. February 2000.The Wizards of Telecom. Business Week, New York.

    Rosier B., Poppy B. November 2000. Vodafone recruits senior Coke chief. Market-ing, London.

    Ryan V. February 2000. Gent gets his man (Nesmann). Telephony, Chicago.

    Shannon J. January 2000. Takeover babble never child's play.Marketing Week, London.

    Vincent D. April 2000. 3G spree. Far Eastern Economic Review, Hong Kong.

    Vodafone. 12/01/2000. Company History. www.vodafone.comVodafone. 2000. Creating Europes Global Telecoms Leader.

    Vodafone. November 2000. Vodafone appoints Pan European Media Planning Agen-cy., Press Releases.

    Walker M. March 2000. The bid that couldn't fail. Euromoney, London.

    All share prices in US$ are the prices of ADRs from:, prices ofstandard European shares in are taken from: