1. What was the strategic and economic rational for Mannesmann’s acquisition of Organge? Did Mannesmann overpay for Orange?
2. Vodafone AirTouch proposed that each Mannesmann share would receive 53.7 Vodafone AirTouch shares, so that in aggregate Mannesmann shareholders would own 47.2% of the equity if the combined firm.
a) Describe the stock swap. As of December 17, what was the market value of Mannesmann’s contribution to the combined firm? As a Mannesmann shareholder, would you accept the current offer? As a shareholders , would you support the proposed transaction?
b) On December 17, 1999 based n real stock prices of the two firms, it seemed that the market estimated the probability of Vodafone AirTouch successfully acquiring Mannesmann at round 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 implies synergies from the deal?
c) What is the present value of the expected synergies (in pounds) as shown in Exh. 10, as on March 2000? (You may to assume that the synergies related to revenues and costs would grow at 4% annually past 2006, but savings from capital expenditures would not extend beyond 2006, and that the merger will not affect the firm’s level of working capital). Use the average exchange rate of 1£=1.5789€ to convert pound synergies into Euros.)
d) UK equities returned 7.7% (in pounds) over the UK risk-free rate the period 1919-1993 and 6.8% over the UK risk-free rate for period 1970-1996. How might this observation affect your decision?
3. What hurdles is Vodafone AirTouch going to face to complete its acquisition of Mannesmann? Who is going to be its most likely supporter? Who is going to resist? Why?
4. Why is Gent so eager to do the deal? Why is Esser fighting so hard?
5. What role do hostile takeovers play? In their absence what mechanisms perform the same function? How is the German Corporate Governance system dufferenet frm the Anglo-Saxon system?
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