Did Mannesmann Overpay Orange Essay

Strategy of Mannesmann to takeover Orange: STRATEGY 1. Block takeover by Vodafone 2. Orange gives Mannesmann a great strategic fit, as it increases market share in the UK 3. Vodafone will unlikely be allowed, from an antitrust perspective, to merge with Mannesmann after the acquisition of Orange; Vodafone already has a market share in the UK of 35%; including the Mannesmann-­? Orange merger it would add up to 53%. In addition, the shares of the Investment Fund is locked-­? up for 18 months 4. Orange has additional holdings in Austria, Belgium and Switzerland and will provide good synergies to the Mannesmann porfolio 5.

Orange is also a high growth company; CAGR 115% Conclusion: The acquisition of Orange makes a lot of sense from a strategic perspective! FINANCE 1. Mannesmann offered to pay: Pound 6. 40 in cash AND 0. 0965 newly issued Mannesmann shares for every Orange share That means a valuation of Orange of Pound 20 (€ 31) bn, which is a premium of almost 17% 2. Before the announcement of the acquisition = share price of Mannesmann was at € 154 3. After the announcement of the acquisition = share price of Mannesmann dropped to € 141. 3 = -­? 8% That is the first implication that the market had a different opinion about the aluation of Orange! 4. Just a few months earlier Deutsche Telekom acquired One2One fro €14 bn Comparables: The acquisition of Deutsche Telekom can be taken as a comparable as they purchased 100%; €58. 1m POPS wich is the same of the Mannesmann acquisition! EBITDA per subscribtion 57x 4,745 Euros 77. 5x 8,857 Euros EV/EBITDA 21. 9x Deutsche Telekom … One2One Mannesmann … Orange European Average Conclusion: Mannesmann did overpay for Orange!! From a financial perspective, Mannesmann should better not have acquired Orange. That’s why the share price dropped significantly by 8% after the announcement as well!

We will write a custom essay sample on
Did Mannesmann Overpay Orange
specifically for you for only $13.9/page
Order now

Haven’t Found A Paper?

Let us create the best one for you! What is your topic?

By clicking "SEND", you agree to our terms of service and privacy policy. We'll occasionally send you account related and promo emails.

Eric from Graduateway Hi there, would you like to get an essay? What is your topic? Let me help you


Haven't found the Essay You Want?

Get your custom essay sample

For Only $13.90/page