LONDON (CNNfn) - Vodafone AirTouch formally launched its blockbuster $138 billion bid for Mannesmann Thursday, describing the offer as "generous" and warning the German firm's shareholders they could be left in the cold if they reject the deal.|
The takeover offer by Vodafone, the world's largest cellular company, is the largest ever launched. The purchase would create a global mobile-phone company, a far cry from an independent Mannesmann focused only on Europe, said Vodafone.
The U.K. company is offering 53.7 of its shares for each Mannesmann share, valuing its target’s stock at 266.4 euros. Mannesmann shares slipped to 232.70 euros, down 1.30 euros.
Mannesmann shareholders would own 47 percent of the enlarged company. Vodafone said the offer is at an 84 percent premium to the value of Mannesmann stock the day after the German company agreed to buy British cellular operator Orange (ORA) in October.
It was the purchase of Orange, one of Vodafone’s main U.K. rivals, that spurred the Berkshire, England-based company to train its sights on Germany. Mannesmann and Vodafone are partners in key European cellular businesses, including leading mobile operators in Germany and Italy, Europe's largest two cellular markets.
The offer document will be posted to Mannesmann shareholders on Dec. 24, and they have until Feb. 7 to make up their minds. Both sets of management have been doing the rounds of major shareholders, attempting to get backing for their arguments.
Relations between the chief executives - Chris Gent of Vodafone and Klaus Esser of Mannesmann - are frosty, and will not have been improved by a German press report Thursday indicating that Vodafone plans to oust Mannesmann's directors if it wins the battle.
A central plank of Vodafone's appeal to shareholders is what it describes as the extravagant cost of Mannesmann's independent strategy. "Developing further in Europe will be very expensive...dilution of [shareholder] interests would seem the inevitable consequence if Mannesmann remains independent."
Vodafone shares rose 1.7 percent to 302 pence in London Thursday.