Mannesmann and Vodafone

5736 Words Mar 7th, 2011 23 Pages
Mannesmann vs. Vodafone

On A Hostile Takeover

December 2000

Martin Marinschek, Student ID 9803246

Abstract

This paper summarizes the proceedings of the largest merger in the history of the telecommunication business, including the two players Vodafone and Mannesmann.

Analyzing the history of the two companies, the reasons for the merger, the merger 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, and the environment of the merger shall be shown as appropriate for a complete description.

Table Of Contents

1 An Introduction To The Case 3
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(Mannesmann. 2000. “Mannesmann at a Glance”.)

Klaus Esser, the CEO of the company, was in the process of selling the tube department and initiating an IPO for the engineering part as well, reducing the scope of Mannesmann’s 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 the internet and wireless phone calls over wires compared best to Orange, the largest concurrent of Vodafone, and he agreed with Hutchinson Whampoa, Orange’s largest shareholder on buying a majority stake in the company. (Walker 2000)

In the proceedings the share price dropped, this opened up the vulnerability of the company: its low market capitalization in comparison to the other huge TelCo’s.

2 Vodafone Before The Merger

The history of Vodafone is a shorter one than Mannesmann’s, as can be seen from the next chapter.

1 A Pure Telecommunication Player

The following history is taken from the company’s 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 telecommunications license in the UK. It succeeded, and rapidly developed its customer base. The telecommunication part of Racal’s business was soon to

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