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

To: David Wiggins who wrote (2084)	11/16/1999 1:24:00 PM
From: MrGreenJeans	Respond to of 3175

ANALYSIS-Vodafone seen testing German corporate law By Paul Carrel FRANKFURT, Nov 16 (Reuters) - Vodafone AirTouch Plc (quote from Yahoo! UK & Ireland: VOD.L) will have to navigate ``Fortress Germany's' maze of corporate laws to take over Mannesmann AG -- a deal which would be the first hostile takeover by a foreign company in Germany. The British mobile phone giant said on Tuesday it plans to make a fresh approach to Mannesmann by Friday. But it must now reckon with Germany's complex takeover rules -- a mire which spectacularly trapped Italy's Pirelli in its 1991 bid for tyre and car parts maker Continental AG . First up, under Mannesmann's company rules, a shareholder cannot vote with more than five percent of their stake, meaning a majority holding would not grant control of the telecommunications and engineering company. This voting restriction is due to be changed on June 1 and analysts regard it as at most delaying a deal. ``It could mean that a hostile bid would take more time than in the United States or Britain,' said Ralf Hallmann, telecoms analyst at Bankgesellschaft Berlin. But Vodafone, which saw its initial 103 billion euro ($106 billion) all-share offer rejected on Sunday, would also need 75 percent of the voting shares to remove members of Mannesmann's 21-member supervisory board -- 10 of whom are workers' representatives. Among the workers' delegates is Klaus Zwickel, the head of Germany's influential IG Metall union. Juergen Ladberg, the head of Mannesmann's works council and a member of the supervisory board, said on Monday that Mannesmann workers supported the decision to reject Vodafone's offer and that they would oppose any takeover. Vodafone has sought to deal pre-emptively with unions by promising there would be no job cuts if it acquired Mannesmann. A FAIR FIGHT Vodafone Chief Executive Chris Gent has urged his Mannesmann counterpart Klaus Esser not to hide behind company rules. ``If he had a serious (defence) proposal which his shareholders supported strongly, then he would have a duty to them to call the appropriate meeting and ask them to remove the five percent rule before June (and let them decide),' Gent said. ``But if he chose not to, we'd go to June anyway,' he added. Analysts said they expected Esser to try to persuade his shareholders that Mannesmann would be more profitable on its own and then let the shareholders decide in a simple majority vote. ``Yesterday, at the conference call, Mr Esser said he will not use any legal hurdles if there is a hostile bid which receives more than 50 percent of shareholders' support,' said Bankgesellschaft Berlin's Hallmann. SHAREHOLDERS THE KEY Even if Esser does fight a clean fight, Vodafone might still have to contend with minority Mannesmann shareholders who could force the British company to court, jeopardising any takeover. Germany does not have a 95 percent ``squeeze out' rule, common in other countries, under which a predator can force remaining shareholders of the target company to accept their bid once 95 percent of the stock has been acquired. Should minority shareholders protest, a deal could be bogged down in court procedures for months or even years. Mannesmann is also seeking a court injunction against U.S. investment bank Goldman Sachs (NYSE:GS - news), Vodafone's advisers. Mannesmann said Goldman had been its long-standing adviser on numerous projects and had confidential information about it. Other investment bankers dismissed Mannesmann's move as a diversionary tactic and noted that Goldman was not alone in working for parties on different sides. WHATEVER MAKES SENSE Despite history being on Mannesmann's side, analysts said market pressures would force the outcome that delivers the best shareholder value. ``If you can make a successful case that Mannesmann is substantially better off as part of a Vodafone group, I think the pressure will be there from the markets to overcome the legal pressures,' said Michael Minzlaff, telecoms analyst at Analysys in London.``That would be my expectation of what we'll see in the next few days,' he added. Globalisation and consolidation across borders, especially in the European Union and in the telecoms sector, made it almost inevitable that some German companies would be taken over by foreign companies in the future, analysts said. Deutsche Bank AG Chief Economist Norbert Walter said earlier that Germans are ``far too nationalistic' when it comes to cross-border mergers and foreign interest in German companies should be viewed positively as it praised performance. Walter said Mannesmann should ask itself whether being acquired by Vodafone was a ``sensible strateg