Mannesmann May Bow to Vodafone if Orange Shares Added to Offer, People Say
By Robert B. Cox, Juliana Ratner and Christine Harper
Mannesmann May Accept Less Than 50% From Vodafone, People Say
London, Feb. 1 (Bloomberg) -- Mannesmann AG may agree to be
acquired by Vodafone AirTouch Plc if the German company's
investors are paid extra shares in the mobile phone business
Orange Plc, people familiar with the talks said.
Mannesmann bought Orange, the U.K.'s No. 3 mobile phone
company, last year, sparking Vodafone's $172.2 billion hostile
bid. Vodafone, the world's biggest wireless company, has always
said buying Mannesmann would require the spinoff of Orange to
appease regulators. Orange shares would be distributed to Vodafone
and Mannesmann shareholders.
If Vodafone gives Mannesmann shareholders a disproportionate
amount of Orange shares, the Dusseldorf-based company may drop its
demand for more than 50 percent of the combined entity, the people
said. Extra shares would increase the value of the offer without
costing Vodafone control, they said.
Vodafone Chief Executive Chris Gent yesterday told analysts
that shareholders of Mannesmann, Germany's second-biggest phone
company, should take into account the value of Orange shares
they'll receive as part of his current offer.
``You could argue that in practice we are transferring more
value than 50 percent back to the expanded Vodafone AirTouch and
Mannesmann shareholders,' he said on a conference call.
Vodafone's offer, which expires Feb. 7, would give Mannesmann
shareholders 47.2 percent of a combined company, or 321.39 euros
per share ($312.28). Gent, in Dusseldorf speaking at a conference
today, said he'd be willing to raise this percentage if Mannesmann
agreed to the offer, though not as much as 49.9 percent.
Esser Cancels Meetings
Mannesmann Chief Executive Klaus Esser today canceled
meetings with investors at which he was supposed to discuss the
bid, fund managers said. The company didn't explain why the
meetings were postponed until later in the week.
The Dusseldorf-based company also declined to comment on a
New York Times report that several Mannesmann supervisory board
members, including Henning Schulte-Noelle, CEO of Germany's
largest insurance company, Allianz AG, and Juergen Schrempp, head
of DaimlerChrysler AG, had pressed Esser to reach an agreement.
The exact amount of Orange that Mannesmann shareholders would
receive couldn't be determined, making it unclear how much the
offer would be worth. Vodafone declined to comment.
``It's all about the value of the offer,' Mannesmann
spokesman Manfred Soehnlein said. He said an offer would have to
provide 350 euros per Mannesmann share plus a ``substantial' cash
component should the German company receive less than 50 percent
in a combined company.
Gent has said he won't offer cash unless he found ``some new
source of cash that we haven't yet identified.' Analysts have
speculated that Vodafone could raise money by selling Orange. Gent
said yesterday that Vodafone hasn't made any agreements to sell
Orange.
Orange Appeal
Mannesmann, which paid $42 billion for Orange, plans to
remove the company's listing from the London Stock Exchange on
Feb. 10. A Vodafone spokeswoman said that if her company acquires
Mannesmann it would seek to renew the listing.
Analysts expect Orange could increase in value -- and would
likely attract a bid from another phone company, such as Royal KPN
NV of the Netherlands or France Telecom SA -- if Vodafone spins
the unit off.
Orange may also increase in value if it succeeds in winning a
license to provide improved mobile phone services, known as
Universal Mobile Telecommunications System, analysts said.
Thirteen companies have bid for five available licenses.
Vodafone said today it applied for a listing on the Frankfurt
stock exchange in case it succeeds in its takeover of Mannesmann.
The move will make it easier for Mannesmann shareholders in
Germany to exchange their shares for Vodafone shares.
In floor trading in Frankfurt, Mannesmann shares rose 15
euros, or 5.3 percent, to 296; more than 21.6 million shares were
exchanged, compared with a daily average of 8.5 million in the
last three months. In electronic trading, Mannesmann shares added
16.05 euros, or 5.7 percent, to 296.3.
Vodafone gained 21.5 pence, or 6 percent, to 360p; more than
474 million shares changed hands, three times the daily average in
the last three months. |
