The takeover drama between telecommunications companies Mannesmann and Vodafone AirTouch intensified yesterday following Mannesmann's supervisory board's rejection of Vodafone's latest buyout offer on Sunday.
Mannesmann Chief Executive Office Klaus Esser and Vodafone's CEO Chris Gent each kicked off separate multi-city tours in an effort to influence Mannesmann executive board members before Vodafone makes a formal offer to buy the German-based company, expected at the end of this month.
In rejecting the stock swap offer of 53.7 shares of Vodafone AirTouch to each Mannesmann share, the Mannesmann board said it "unanimously supports the decision of the executive board to oppose the hostile takeover attempt." The deal has been valued at $US125 billion by industry analysts.
Esser began his 20-city tour in London yesterday by meeting with key shareholders and outlining his case for Mannesmann's rejection of Vodafone's advances.
The Vodafone offer is the wrong strategy at the wrong price, made in the wrong way, Esser said. "The value of Mannesmann is significantly higher than the offer on the table," he added.
Mannesmann's integrated telecommunications strategy of providing mobile and land-based lines to move both voice and data is in direct contrast to Vodafone's business strategy which "changes every few days," Esser said.
"Vodafone is looking for a solution to solve their strategy crisis. That is good for them, but not good for Mannesmann. The two portfolios just do not fit," Esser said.
When asked if there is an offer high enough to meet with Mannesmann's approval, Esser replied that there is, but he would not reveal any specific amount. "I am not in the business of asking for offers for the company," Esser said.
Last Tuesday, Mannesmann released its earnings for the first nine months of 1999 and projected its revenue growth rate for 2000 to 2003.
The carrier also announced plans for spinning off its engineering and automotive departments into a separate company with an IPO (initial public offering) expected in seven months.
For the period 2000 to 2003, Mannesmann predicts a 25 percent increase in its wireless business to a value of 3.8 billion euros ($US3.9 billion) and a 30 percent increase in its wireline-based business to 3 billion euros, equivalent to a total growth rate of 30 percent.
"From here on it's simple mathematics. If the shareholders want to get richer, they will get richer with the (wireless and wireline) integrated strategy," Esser said.
Esser did not reject the possibility of a "white knight" offer to stave off Vodafone's hostile takeover. However, he stressed that Mannesmann's lack of interest in merging with UK-based Vodafone has nothing to do with nationalism. The political reaction in Germany to news of the takeover bid was "anti-hostility, not nationalist," Esser said.
"There is no need for Mannesmann to stay a German company and no need to think that way in a modern age," Esser said.