Case Study: Vodafone AirTouch's Bid for Mannesmann (group work)
(2011-07-27 15:51:27)
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标签: mbacorporatefinancevodafoneairtouchmannesmann财经 | 分类: CorporateFinance |
HARVARD BUSINESS SCHOOL
9-201-096
REV: AUGUST 22,2003
SIMI KEDIA
Vodafone AirTouch's Bid for Mannesmann
I. Mannesmann’s acquisition of Orange
A Back grand introduction
Mannesmann, formed in 1890 as a producer of seamless steel tubes, entered the telecommunications industry in 1990 by establishing and operating D2, the first private mobile phone network in Germany, and then it quickly became one of Europe’s largest telecommunications companies. By 1999, it had gained a leading position in four of the largest European mobile markets.
Orange, formed in 1994, was
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II. Vodafone’s proposal for the acquisition of Mannesmann
A Rationales behind
It is costly to do a hostile acquisition, and Vodafone has to face many obstacles even from the government. However, Vodafone still insists on acquiring Mannesmann.
Firstly, the acquisition could help expand the area of business. Mannesmann has the business in the telecommunication equipment, internet service, hydraulic, material handling, plastics technology and steel tubes. Vodafone could enter into such areas without taking the risk of entrance.
Secondly, the Mannesmann’s big market share in Germany will help Vodafone to ensure the leadership in the European market and even become the biggest operator in the word. Thirdly, the combination will bring Vodafone big synergies from both revenue side and cost saving side. For example, the Vodafone could greatly reduce the cost the call from German to UK as they will be in the same system, while it could attract more users based on this kind of advantage. Besides, the merge reduces the cost of purchasing. The more investment in the oversea markets also reduces the unsystematic risk, and increases the value of the brand “Vodafone”.
B The Stock Swap Proposal
Vodafone Air Touch proposed that each Mannesmann share would receive 53.7 Vodafone AirTouch shares, so that in aggregate Mannesmann shareholders would own 47.2% of the equity of the new combined firm. This is a stock swap acquisition.
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