Vodafone Acquisition of Mannesmann

B. Rajesh Kumar
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B. Rajesh Kumar: Institute of Management Technology

Chapter 2 in Wealth Creation in the World’s Largest Mergers and Acquisitions, 2019, pp 17-29 from Springer

Abstract: 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.

Keywords: Mannesmann; Vodafone AirTouch; Largest Mobile Phone Operator; Post-merger Period; Trusted Entity (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/978-3-030-02363-8_2

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