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Vodafone Airtouch’s Bid for Mannesmann

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Robert H. Smith School of Business | Valuation | Case #4 Vodafone AirTouch’s Bid for Mannesmann | |

Executive summary

Vodafone AirTouch, one of the world’s leading international mobile telecommunications companies, was considering launching a formal hostile bid for Mannesmann, a German telecommunications company which is also among the largest telecommunications companies in Europe. If this come true, it will become the largest hostile takeover in the world.
But now we are facing one of the biggest problems during this process---valuation of Mannesmann. After our discussion, we decide to use the DCF method with the information provided in Exhibit 7 and some reasonable assumptions we made about Mannesmann’s future situation. As a result, we found that the value of Mannesmann is € 175,793.41million or € 338.85/share which is lower than € 350/share.
At last, we also consider the synergy from the deal based on Goldman Sach’s estimation or market’s angle. Based on Goldman Sach’s estimation, we find that the synergy from the deal is about $7510.98 million. Thus, we would suggest Vodafone’s shareholders to accept the acquiring offer for Mannesmann. But with the consideration of the market estimated synergy analysis, the synergy value is €45911.84 million. Although the synergy value is positive, the NPV based on market estimation is negative, so we do not recommend Vodafone acquire Mannesmann.

Problem Overview
Vodafone AirTouch, one of the world’s leading international mobile telecommunications companies, was considering launching a formal hostile bid for Mannesmann, a German telecommunications company which is also among the largest telecommunications companies in Europe. If this come true, it will become the largest hostile takeover in the world. The combination of Vodafone AirTouch and Mannesmann will give rise to signify synergy. But there is also…...

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