First of all, I agree that a combination between VOD and Mannesmann is logical. On the other hand, I know how corporate transactions are played over here in Germany: That's the reason I make the bulk of my investments in the US, the UK, Canada and Australia. Public opinion is very much against big takeovers. Many fear that this results in more job losses (and this is a crucial topic when there are almost 10 % of total workforce unemployed). Trade unions are far more powerful than in the US or the UK. These people are really some sort of socialists and they don't like such deals at all (I guess nobody of these guys wants to lose his board seat, so a friendly deal is unlikely).
Mannesmann is also trying to improve sharholders loyality: Today I saw a full page add in the Handelsblatt (some sort of Germany's counterpart of the WSJ or the Financial Times), where they showed a chart of Mannesmann for the last 5 years rising 805 % in contrast to the Euro Stock 50 index rising only 280 %. The headline was: Mannesmann w„chst weiter (means: Mannesmann continues to grow). Mr. Gent from VOD should not expect a surrender from Mannesmann's board. My guess is, that they're playing the for more time, which means the want to boost their stockprice and on the other hand want investors to worry about VOD's financial conditions. VOD can't make a cash offer, if Mannesmann's price moves so high (german fund managers demand 270 - 300 Eur per share which might be too expensive for VOD), that an aquisition would heavily dilute VOD's earnings, VOD's board would face critics from institutional investors. Mannesmann know's that a high stock price is VOD's currency and they want to get that down.
Mr. Gent made a big mistake by approaching Mannesmann, he should better have looked at other buying opportunities.
Regards
Kai
P.S.: As I said, I'd like such a deal, but I know that most people here in Germany are not thinking the same way. If you're living your whole life in a country like this, you'll know how things are going, but as an American these people are rather hard to understand. |
