Advertisement

Vodafone Acquisition of Mannesmann

  • B. Rajesh Kumar
Chapter
Part of the Management for Professionals book series (MANAGPROF)

Abstract

Vodafone had undertaken a series of alliances and mergers and acquisitions (M&A) activity as a strategic pursuit for growth. On November 13, 1999, the UK-based Vodafone AirTouch, the world’s largest mobile phone group, announced a takeover bid for the German telecommunications and engineering group Mannesmann AG on the basis of an exchange of shares between the two companies. This offer was the largest unsolicited takeover bid at that time. On February 3, 2000, Mannesmann board of directors accepted Vodafone’s offer. Each Mannesmann shareholder received 58.964 Vodafone shares which gave them 49.5% stake in the new company. The deal was valued at approximately $180 billion. The new combined entity had a market capitalization of $350 billion. The combined entity became the fourth largest company in the world in terms of market value after Microsoft, GE, and Cisco at the time of the deal. The takeover created the world’s largest mobile phone operator with 42.3 million customers in Britain, the United States, Germany, Italy, France, and other markets. It was one of the biggest horizontal mergers in telecommunication history. As a result of the merger, Vodafone and Mannesmann had controlling stakes in ten European markets. The acquisition gave the merged entity the most extensive wireless coverage in the European market. The integration of culture and skills of Mannesmann was one of the Vodafone AirTouch’s biggest challenges. The strategic focus of Mannesmann had been for the reorientation of the company from industrial firm to service and telecommunication provider. Vodafone plunged into massive losses after one-off costs of more than £23.5 billion connected to the Mannesmann deal. During the merger period, Vodafone was in a superior financial position compared to its competitors. After Mannesmann acquisition, Vodafone doubled in size. The chapter analyzes the comparative operative performance in the pre- and post-merger period along with stock market effects during the announcement period.

References

  1. Annual Report (1999, 2000a) Vodafone AirTouchGoogle Scholar
  2. Annual Report (1999, 2000b) Mannesmann A GGoogle Scholar
  3. Byles C (2006) Vodafone air touch: the acquisition of Mannesmann, case analysis, May 2006. Virginia Common Wealth University, United States of AmericaGoogle Scholar
  4. de Donald P (2009) Vodafone AirTouch acquires Mannesmann in a record setting deal, introduction to mergers and acquisitions, mergers, acquisitions and other restructuring, an integrated approach to process, tools, cases and solutions, 2nd edn. Academic Press, United States of AmericaGoogle Scholar
  5. Higson C Value creation at Vodafone, London Business School, CS 09–009Google Scholar
  6. Mannesmann: the mother of all takeovers (2010) http://www.dw.com/en/mannesmann-the-mother-of-all-takeovers/a-5206028. Accessed June 21 2017
  7. Streamingmedia (2000) Vodafone Air touch and Mannesmann agreement on terms for a recommended merger. http://www.streamingmedia.com/Articles/News/Online-Video-News/Vodafone-Airtouch-And-Mannesmann-Agreement-On-Terms-For-A-Recommended-Merger-61825.aspx. Accessed 20 June 2017

Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  • B. Rajesh Kumar
    • 1
  1. 1.Institute of Management TechnologyDubaiUnited Arab Emirates

Personalised recommendations