From the Observer
Mannesmann eyes French rescue
Merger with Vivendi an option ? BT, SBC await Vodafone's œ79 billion hostile bid fall-out
Jamie Doward and Paul Farrelly
Sunday November 21, 1999
The German group Mannesmann has considered merging its telecoms operations with those of French media giant Vivendi to defeat a surprise hostile bid from Britain's Vodafone AirTouch.
Vodafone caused political uproar in Germany last Friday by making the record œ79 billion bid, which Mannesmann summarily rejected as risky and inadequate.
The move by the leading UK mobile phone company followed a humiliating defeat in the High Court in London last week, when it failed to bar Vodafone adviser Goldman Sachs from acting for it over the deal because of an alleged conflict of interest.
Late on Friday, Mannesmann chief executive Klaus Esser insisted the group would now fight Vodafone on the value of the bid alone.
According to City sources, however, Mannesmann has considered combining its mobile phone activities with Vivendi's media and telecoms arm in an effort to put itself out of Vodafone's reach.
Vivendi is understood to have been the unnamed French 'project' on which Goldman Sachs was assisting the Germans that was mentioned in High Court documents filed by Mannesmann last week.
The revelation comes as Vodafone is increasingly confident of winning over a majority of Mannesmann shareholders. However, Vodafone's chief executive, Chris Gent, ruled out any possibility of sweetening the all-share bid with some cash.
'This is a final offer and we don't intend to change it,' Gent told The Observer. 'We're pretty confident we're going to win.' But rivals have not yet ruled themselves out of joining the scramble. As this newspaper revealed last week - after Vodafone's initial œ64bn offer - SBC Communications, the largest local US phone operator, is watching developments carefully.
Industry sources say British Telecom is also still interested in Mannesmann, though it is unwilling to match Vodafone's higher price. However, Vodafone shares fell sharply at the end of last week on dilution fears, reducing the value of its bid.
BT is attracted by Mannesmann's French and Italian assets and, with a cashpile of œ20bn and little debt, it could offer more than shares. The US firm GTE, being taken over by Bell Atlantic, is another rival that Esser respects.
If Vodafone's shares keep falling, industry sources believe the firm itself could be a target for a US bidder, principally Bernard Ebbers' aggressive MCI Worldcom. Salomon Smith Barney, the Wall Street bank that has backed Ebbers, is keen not to miss out on the wave of industry mergers in Europe.
On Friday German Chancellor Gerhard Schr”der said he preferred 'amicable French-German co-operation'. Vodafone had already claimed Tony Blair's backing. This weekend Mannesmann declined to comment on any French talks, and dismissed any recourse to 'poison pills', or 'black or white knights'.
But one Mannesmann source said: 'If Vivendi said it was getting out of media and telecoms to focus on its utilities operations, of course that would be attractive.' |
