VODAFONE: Chief executive 'confident'
By Guido Warlimont in Hamburg and Vincent Boland in London
Chris Gent, chief executive of Vodafone AirTouch, says he is "confident" of the support of Mannesmann shareholders in ensuring he wins Europe's biggest ever takeover battle. But some German holders of Mannesmann shares say the bid does not appeal to them in its current form - though many of them like the idea of a merger between the two companies.
Mannesmann's supervisory board meets tomorrow to consider Vodafone's all-share offer. Klaus Esser, Mannesmann chairman, said yesterday there was "no substance" to recent speculation of a friendly deal - and if the German group's supervisory board rejects Vodafone's bid a second time, observers said hostilities would break out in earnest next week.
Since the completion this week of Mannesmann's takeover of Orange, the UK mobile telecommunications company, only about 35 per cent of its shares are owned by German investors. But if Mr Gent is to achieve his minimum target of acquiring 50.01 per cent of his prey, it would be helpful to have the support of at least some of those investors.
Mr Gent spent much of the week in Germany meeting some of those shareholders. Some said the all-share offer either was not high enough or would have to be sweetened by a cash element to win their support.
"Under current conditions, we will reject the offer because it is not high enough," said Josef Scarfone, fund manager at Frankfurt Trust, which owns 0.5 per cent of Mannesmann. "As long as there is no significant cash component, many German institutional investors will not swap their shares."
A fair price, he suggested, would be E270 to E280 for each Mannesmann share if there was no cash component - which Vodafone has ruled out. The supervisory board will consider the UK group's all-share offer, which values Mannesmann's shares at about E253 each, based on Vodafone's closing share price last night. Mannesmann shares closed down E1.74 at E200.51 yesterday.
Holger Knauer of Universal-Investment-Gesellschaft, which accounts for another 0.5 per cent of Mannesmann, said the fact that Vodafone was not a euro-zone stock would prevent many of its funds from accepting the bid. "Vodafone is not part of the Euro Stoxx index. That's why most of our funds will not accept the offer."
Others said they would wait until a definite offer was put on the table and they had met both sets of managements before deciding what to do with their stakes. Dirk Rupers, manager of European equities at Dresdner Bank Investment Management, said the takeover bid offered "the opportunity to choose between two good companies".
Allianz Asset Management, often a crucial influence in German takeover battles, owns less than 1 per cent of Mannesmann and is therefore not so influential to the outcome. It said no decision had been taken on which company it would support. But with no cash element to the bid, there is no incentive for it to swap one risk for another.
The logic of a merger between Mannesmann and Vodafone may be the deciding factor for many German investors. JĀrgen Homola, senior portfolio manager at Commerz International Capital Management, said Vodafone would probably succeed in its takeover attempt. |
