Case Study: Vodafone AirTouch's Bid for Mannesmann (group work)
(2011-07-27 15:51:27)
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标签： mbacorporatefinancevodafoneairtouchmannesmann财经 | 分类： CorporateFinance |
HARVARD BUSINESS SCHOOL
9-201-096
REV: AUGUST 22,2003
SIMI KEDIA
Vodafone AirTouch's Bid for Mannesmann
I. Mannesmann’s acquisition of Orange
A Back grand introduction
Mannesmann, formed in 1890 as a producer of seamless steel tubes, entered the telecommunications industry in 1990 by establishing and operating D2, the first private mobile phone network in Germany, and then it quickly became one of Europe’s largest telecommunications companies. By 1999, it had gained a leading position in four of the largest European mobile markets.
Orange, formed in 1994, was the third …show more content…

As a Vodafone shareholder, would you support the proposed transaction?
Vodafone issued 27.8 billion new Vodafone AirTouch shares, it will give 47.2% of the combined company to Mannesmann shareholders.
The stock swap is one Mannesmann share could be exchanged to 53.7 new issued Vodafone shares. It valued Mannesmann at around 232 a share, the Vodafone share is the market price which is 4.32. No cash involved in the stock swap.
On December 17, the market value of Mannesmann ‘s contribution is 121billion while the Vodafone Air Touch is about 154 Billion. The propose transaction is to give 47.2% of the combined company to Mannesmann, the situation is Mannesmann only worth 44%. The proposed transaction is over estimate and should not have been supported.
C Estimation of Synergies
On December 17, 1999, based on real stock prices of the two firms, it seemed that the market estimated the probability of Vodafone AirTouch successfully acquiring Mannesmann at around 0.6. Under the assumption that if the bid fails both firms would trade at prices prevailing on Oct. 21, 1999, what is the market’s estimate of implied synergies from the deal?
The market’s estimate of the implied synergy is l If acquisition is completed : 67055.44 million l 60% probability of success : 40233.26 million l If acquisition fails : 0
What is the present value of the expected synergies (in pounds) as shown in Exhibit 10 as of March 2000? (You may want to assume that the synergies related to the revenues and