FOCUS-Vodafone investors braced for dilution
By Kirstin Ridley
LONDON, Nov 17 (Reuters) - Institutional investors in Vodafone AirTouch Plc (quote from Yahoo! UK & Ireland: VOD.L), the cellphone giant vying for control of Germany's Mannesmann AG , said on Wednesday they were braced to see returns diluted.
Two days before an expected record hostile bid by the world's biggest mobile phone company for its European partner, some investors said they would back a bid of around 126.5 billion euros ($132 billion), or 250 euros per share.
This would dilute returns by around 10 percent over two years. Other investors said they might accept a higher bid -- and just trust Vodafone not to overspend.
``We could take 250 (euros per share) quite easily,' said one fund manager. ``Beyond 250, I think we'd want to see Vodafone again and get them to go through in more detail what we went through this morning.'
Vodafone, which saw an initial 103 billion euro, 203 euro-per-share, bid curtly rejected on Sunday, plans to discuss a fresh Mannesmann bid at a board meeting on Thursday afternoon after tapping investor enthusiasm for a higher offer.
As the battle for control of the group's key partner in Germany, Italy and France escalates, Vodafone's top management headed off around the globe to talk with investors and seek backing for a bid that looks set to make corporate history.
A hostile move looks inevitable since industry sources believe Vodafone would have to offer well over 300 euros per share before it has any hope of winning the ear of Mannesmann's ambitious Chief Executive Klaus Esser.
``At the end of the day, we are talking about value,' the source said. ``If they can deliver a value well in excess of 300 euros per share, I think Esser would have to listen.'
MARKET ON TENTERHOOKS
But in a move that underlines the nervousness of the market, a last-minute change of plan by Vodafone about which executive should speak with which U.S. investors was promptly interpreted as a sign that Vodafone might abandon plans of a fresh bid.
Mannesmann shares sank over six percent in Frankfurt and closed 11 euros lower at 196.65. Vodafone clawed back some of its recent losses, gaining around two percent to close at 277p.
However, a Vodafone spokesman insisted: ``The price is the final thing. That is what we are looking for...Nothing has changed.'
Vodafone plans to table a fresh offer in time for a meeting of Mannesmann's supervisory board meeting on Friday.
Stung into action by the German group's surprise $32 billion bid for its domestic arch-rival Orange (quote from Yahoo! UK & Ireland: ORA.L), UK-based Vodafone is battling for its prized joint ventures in Germany and Italy, which Mannesmann controls.
``Strategically, I think everyone agrees that it is very important for Vodafone to close this deal,' noted another institutional investor. "More than that, it's very important to make sure noone else gets Mannesmann.
``I think they're in a very difficult position. They are almost damned if they do and damned if they don't.'
Chief Executive Chris Gent has returned to London and will remain here until a board meeting on Thursday. Julian Horne-Smith, managing director of Vodafone's international operations, is in Germany and moving on to Paris, while Finance Director Ken Hydon remains in the U.S. |
