| Event |
Vodafone - Mannesmann Merger
|
| Background |
In November 1999 Vodafone AirTouch (VA) made a hostile
bid for rival (and also alliance partner) Mannesmann. Finally valued at around
$130 and concluded in February 2000, the deal represented the world's largest
ever hostile take-over. |
Analysis
(to offer your own
analysis go to the 'Current Events' section of theWorkshop zone) |
In October 1999 Mannesmann had agreed to buy UK mobile
operator, Orange, for $31 billion. Orange's main shareholder, Hutchison
Whampoa, agreed to sell only 10 days after they had first been contacted by
Mannesmann
The reaction of VA was just as quick, mounting a counter-bid
for the German company within a few weeks. This move was widely predicted as VA
now saw its own strategic interests seriously threatened by Mannesmann's move.
The success of VA's bid, however, was far from assured, not least because of
Germany's stringent takeover rules.
After a vigorous defence by
Mannesmann the deal was struck, making it the first ever hostile takeover of a
German company by a foreign outfit. The New York Times (4/2/2000) saw it as "a
watershed in European corporate behaviour". |
| Implications for Layer
Structure (see Industry Mapping for the layer
model). |
The merger, coming as it did shortly after
the takeover of One2One by Deutsche Telekom, revealed the rapid pace of the
consolidation among the principal operators within the European mobile network
layer.
At the same time this merger activity was affected by the
imminent prospect of third generation phones and with them mobile internet
access and m-commerce. The company with the most comprehensive network will be
best positioned to profit from the increasing use of mobiles for data transfer.
This shift onto the internet will undoubtedly take the mobile operators into
Layers III to V as they seek to provide their own portals and associated
services. |
| Implications for
Key Questions. |
While both companies involved were
European, they each had global aspirations (with Vodafone taking over AirTouch
earlier in 1999). This shows that while lagging behind US firms in the
fixed-communications industry, European companies are at the cutting edge of
the mobile sector. |
