The Hong Kong conglomerate Hutchison Whampoa said Mannesmann's growth strategy for telecoms was superior to that of Vodafone and re-iterated that its investment in the company was a long-term strategic investment. Hutchison has emerged with a 10 per cent shareholding in Mannesmann following the German company's takeover of Orange in which it held a 45 per cent stake. The pounds 20bn deal became unconditional yesterday after Mannesmann announced it controlled 75 per cent of the shares.
Canning Fok, managing director of Hutchison, praised the Mannesmann chief executive, Klaus Esser, and added: "Jointly with Orange, Mannesmann will be an outstanding company and better positioned than Vodafone in the future opportunties in the telecom business."
He added that a combination of Orange and Mannesmann offered Hutchison shareholders the best opportunity to participate in the growth of the European telecoms sector.
Meanwhile, Mannesmann detailed its plans to unlock shareholder value by spinning off its engineering and automotive divisions from its mobile and fixed telecoms business. The demerger, which has not been due to take place until 2001, will happen in the middle of next year.
Despite the announcement and a set of nine-month results in line with expectations, Mannesmann shares retreated 5 per cent to close 9.5 euros down at 178.5 euros. There is a 23 per cent discount between Mannesmann's market price and the value of Vodafone's all-share offer. The Mannesmann camp attributed this to a growing belief in the markets that Vodafone's bid would fail. Vodafone's advisers insisted it was due to heavy selling by Mannesmann shareholders seeking to lock in profits and frustrated at Dr Esser's refusal to agree a merger.
Chris Gent, Vodafone's chief executive, pledged in a letter to Wolfgang Clement, the Prime Minister of North Rhine Westphalia, where Mannesmann's headquarters are located, that there would be no job losses if the bid succeeded. He also promised Vodafone would observe the principle of co- determination and Mannesmann's two-tier board structure which gives the workforce influence over the way the company is run.
Mr Gent's promises cut little ice with Mannesmann's works council, which gave the Vodafone bid a hostile reception during a meeting with Mr Clement. Mr Gent also pledged that Vodafone would not sell Mannesmann's engineering and automotive businesses to a third party but would demerge them.
Mannesmann said its nine-month results, showing profits up 45 per cent to 1.09bn euros, proved it was growing revenues and earnings faster than Vodafone. But Vodafone said the results had not been adjusted for Mannesmann's increased shareholdings in the Italian mobile and fixed line networks, Omnitel and Infostrada.Reuse content