FT 2/4 MARKET PRESSURE: Mannesmann chief forced to reconsider
By Ralph Atkins and Richard Waters
It was overwhelming pressure from investors, financial markets and supporters of shareholder value within Mannesmann's own ranks that finally led Klaus Esser, the German group's chairman, to agree to a merger that could change the landscape of European business.
As recently as last October, a foreign hostile takeover assault on a big German company - let alone one that had performed as spectacularly well for its shareholders as Mannesmann - was seen as having little prospect of success.
Even though Vodafone overcame national resistance to the idea of a foreign takeover of corporate Germany's fastest-rising star, Mannesmann's own bylaws and German legal rules made the successful attack difficult.
That Mr Esser has now agreed to let Vodafone take control of Europe's telecoms champion speaks volumes about how far corporate Germany has moved, and how far the door has opened to a true cross-border takeover market in Europe.
It was a powerful message delivered by the stock market that finally pushed Mannesmann to accept the deal. Its advisers recall Mr Esser being mocked late last year for suggesting its shares were worth E300.
But on Wednesday's close, after a big rise in European telecoms stocks in general, Vodafone's offer valued the stock at E375. That - along with the message brought back from recent investor roadshows - almost certainly convinced Mr Esser he had to agree to the merger.
To waver longer could have provoked a rebellion by shareholder representatives on the supervisory board - including JĀrgen Schrempp, DaimlerChrysler chairman - who have been leading the transformation of Germany's corporate culture.
People close to Mr Esser hotly deny that it was Mr Schrempp who finally nudged the Mannesmann boss to agree to talk.
The DaimlerChrysler chief was sick in bed this week when the merger negotiations began in earnest, and did not even take part by telephone in a pivotal board meeting on Monday, according to one adviser. However, his influence was widely credited with ensuring that Mannesmann conducted its defence in full scrutiny of its shareholders.
There was also said to be support for an agreed deal from elsewhere on the supervisory board - including workers' representatives who feared the damaging consequences of a hostile takeover.
The rise in Mannesmann's share price eventually made it possible for Mr Esser to agree to a deal that would cede control of his company while still claiming a degree of victory. The German group's advisers claimed the campaign had created E115bn ($112bn) in extra value for Mannesmann's shareholders - resulting from the difference in its share price before its campaign started and the price offered finally by Vodafone.
In addition, "Mannesmann had clearly won the intellectual argument", according to one adviser to the German group, with its insistence that the best growth prospects were offered by integrating fixed and mobile networks.
Yet, by agreeing to the deal that has left his shareholders with less than half of the merged company, Mr Esser appeared to have reversed course on what, only the day before, the Mannesmann camp had maintained was a key issue.
Asked why, one adviser said: "We have consistently displayed a hard attitude in the marketplace. Privately, of course, we were showing greater flexibility." |
