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Technology Stocks : Vodafone-Airtouch (NYSE: VOD) -- Ignore unavailable to you. Want to Upgrade?

To: MrGreenJeans who wrote (2006)	10/19/1999 7:58:00 AM
From: MrGreenJeans	Read Replies (1) \| Respond to of 3175

FOCUS-Mannesmann courts Orange (Recasts, adding Vodafone no comment, analyst comment) By Kirstin Ridley LONDON, Oct 19 (Reuters) - Germany's Mannesmann said on Tuesday it was in talks to buy Britain's third biggest mobile telephone company Orange Plc, casting doubt on a relationship with key European ally Vodafone AirTouch Plc (quote from Yahoo! UK & Ireland: VOD.L) (NYSE:VOD - news). Mannesmann's move, which highlights a global consolidation game that has already seen compatriot Deutsche Telekom snap up Orange's UK rival One2One, initially sent Orange's shares leaping by around 10 percent to value it at above 17.5 billion pounds ($29.25 billion). Some analysts said it might even spark a defensive bid for Mannesmann from Vodafone. ``In response to recent speculation, Mannsmann confirms that it is in discussions which may, or may not, lead to an offer being made by Mannesmann for Orange,' Mannesmann said in a statement released by the London Stock Exchange. ``A further announcement will be made as and when appropriate,' it added. Analysts said the talks, confirmed by Orange's 44.8 percent shareholder Hutchison Whampoa in Hong Kong, could flush out other bids for Orange and kick off a spate of offers across the liberalising continent. VODAFONE SIDELINED? But Vodafone AirTouch, the world's biggest cellphone company which has joint operations with Mannesmann in Germany, France and Italy, looks set to be sidelined in Europe if the Germany company succeeds in its bid. ``It's a do-or-die situation for Vodafone,' said one analyst. ``I think what they need to do right now is spark a defensive bid for Mannesmann to stop this happening.' ``If they don't bid, they will have no presence in the majority of Europe,' the analyst added, saying that he thought the two companies would be unable to patch up differences and work together on the continent if Mannesmann bought Orange. Vodafone declined to comment. Shares in Orange, which has often been linked with the fast-growing German company, jumped to touch a new 12-month high of 14.84 pounds before settling at 13.72 pounds, a rise of three percent, by 1035 GMT. Mannesmann shares fell by around five euros in Frankfurt to trade at 149.60. MANNESMANN BANKS ON TELECOMS The German group last month announced it was splitting into two groups, one covering telecoms and the other its traditional engineering activities, following the dramatic growth of the telecoms operations -- among the most successful in Europe's newly liberalised markets. A purchase of Orange would underline Mannesmann's pan-European ambitions by giving it a strong foothold in Britain in addition to its major presence in Germany, Italy and France. It would also shore up Mannesmann's own defences against a possible takeover by Vodafone. Analysts said they believed Mannesmann would pay mostly cash for Orange, funded through a share placing. But the German group could be paying a high price for what is seen as the last opportunity to gain a position in the booming UK market. Analysts said Orange's share price indicated a price of around $5,800 per subscriber, compared with the $5,000 Deutsche Telekom paid for Orange's rival One2One in April. Mannesmann pulled out of that auction, saying the price was too high. Even Vodafone is currently trading on around $5,500 and most other European cellular companies trade nearer $2,500 per subscriber, analysts noted. ``What your seeing here is that mystical valuation factor that none of us can calculate which is the strategic premium,' said one. A data revolution, triggered mainly by technological advances and the commerce possibilities over the Internet, and liberalisation on the European continent has already seen France Telecom take stakes in UK and German companies. ``This consolidation game is moving beyong national boundaries,' said another analyst. ``Europe is a big hunting ground, it's all about extending your reach, increasing your scale and scope.' HONG KONG SECURITY? Orange had been considered relatively bid proof because it is 44.8 percent-owned by Hong Kong conglomerate Hutchison Whampoa, which has consistently said it wanted to use the British company as its expansion vehicle in Europe. But the Hong Kong group surprised the market in February by placing a 4.2 percent stake in a move interpreted by analysts as a move to cushion an economic crisis in Asia. It also was seen as a first move to put the British company into play. Orange, which has almost 3.5 million British subscribers, is yet to move into profit. Its shares have almost doubled in the last year, outperforming the FTSE All-Share Index by 86 percent in the year to date.