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

To: MrGreenJeans who wrote (2096)	11/17/1999 7:52:00 AM
From: MrGreenJeans	Respond to of 3175

From the Financial Times 11/16 Huggy bear The bear has tightened its grip but is still shrinking from the kill. Vodafone AirTouch's decision to subject Mannesmann to a prolonged "bear hug" shows that the UK company recognises the dangers of its endeavour. Launching a hostile, all-share, cross-border bid is about as risky a cocktail as one could imagine. This adventure can only possibly succeed if Vodafone has its shareholders squarely behind it. With its share price already falling, it clearly makes sense to make sure investors want it to proceed. In terms of strategic vision, they should. Vodafone's and Mannesmann's mobile businesses do seem to belong together. They are already partners in Germany, Italy and France. Combined they would have a virtually complete pan-European network. They could offer voice services across the continent and would be excellently positioned to ride the coming wave of mobile data services. Mannesmann's counter-arguments look thin. True, it has given a higher priority to fixed telecoms services. But this seems more a difference of emphasis than a deal-breaker. Vodafone plans to keep Mannesmann's fixed businesses, floating only a portion on the stock market. Similarly, Mannesmann's claims to be more advanced in mobile data appear overdone. Whichever has a slight edge today - and that is disputed - both see the internet-on-your-mobile-phone as the next frontier. Where Mannesmann has a stronger case is on valuation. Vodafone's weekend sighting shot of E203 - or 43.7 of its own shares for each Mannesmann share - may have been 40 per cent above the German com- pany's recent lows. But Mannesmann was undervalued at that level relative to Vodafone. There were no doubt good reasons: Mannesmann suffered a conglomerate discount and shareholders were worried that it was overpaying for Orange. But it is now a different ball game. Mannesmann's most telling point is that it controls virtually all its mobile businesses, whereas Vodafone is a junior partner in the US and much of continental Europe. Control matters - particularly to make the most of the coming data wave. Vodafone understands this. Indeed, that is why it is so keen to acquire Mannesmann. All this means the German company is in a position to drive a hard bargain. It should certainly be able to achieve E240 a share. If a deal was done at that level, there would still be some upside left for Vodafone shareholders - although it would come through strategic positioning rather than quantifiable synergies. And with some clever negotiating, Mannesmann might be able to achieve an even better deal. But Klaus Esser, Mannesmann's chairman, gives the impression of not wanting to do a deal at any price. Not only did his bid for Orange look a defensive ploy to thwart Vodafone; his suggestion that Vodafone should double its offer is fanciful. It makes him look less like a champion of shareholder value than a man determined to hang on to his empire.