Chris Gent Is Already Looking Beyond Mannesmann
For a man angling to clinch the biggest deal ever in Europe, Vodafone AirTouch PLC Chief Executive Chris Gent should by rights be immersed in the crucial details of his audacious takeover bid. After all, shareholders have only until Feb. 7 to vote on Gent's $160 billion-plus bid for German telecommunications rival Mannesmann. But Gent, these days, seems surprisingly relaxed. He's in the endgame--and he's sure he has won. In fact, if Chris Gent has his way, Europe is in for another year of frenetic dealmaking by the British cell-phone giant.
The bespectacled, mild-mannered Gent is talking a great game. The Mannesmann bid? It's in the bag. Mannesmann's German shareholders, he says, tell him they will not let nationalist sentiments sway them from voting his way. "This isn't going to be decided by some Fortress Germany," scoffs Gent.
And to win the post-takeover peace, Gent already is making some conciliatory gestures to Mannesmann CEO Klaus Esser. "If Esser wished to serve, he could certainly be on the board. He's a very able man," Gent says. The executive board, he adds, could include other Mannesmann officers. But Gent isn't letting up the pressure. If Esser refuses to accept a sweetened, friendly deal before Feb. 7, Gent will go forward with his hostile bid.
So sure is Gent of success that he's planning his next deals. He is close to winning control of Airtel, Spain's fastest-growing cellular company. He's talking to America Online Inc. about joint Internet ventures. He plans to boost his current stakes in mobile operators around the globe. He's even talking to France's Vivendi, Esser's hoped-for white knight, about an Internet alliance. Many observers interpret Vivendi's seeming reluctance to pursue talks with Mannesmann as a vote of confidence for Vodafone. "There are other deals we've got in the pipeline," says Gent. "Of course, they'll be even stronger if we have [Mannesmann]."
Since the bid was made on Nov. 14, Mannesmann's shares have nearly doubled in value, to around $280, just shy of the $300 target price Esser originally said would be acceptable. Vodafone's shares have gained 23%, too. As a result, the value of the bid has risen by $35 billion. "The deal is moving in Vodafone's favor," says James McCafferty, telecom analyst at Societe Generale Strauss Turnbull Securities Ltd. Gent also says he is willing to "tweak" his offer of giving Mannesmann shareholders 47.2% of the new company. Analysts say he might be willing to part with as much as 48.9%.
A number of German institutional shareholders now hope Esser will capitulate. "Many German investors think there is merit in Gent's strategy and that the price is a good one," says Robert Vinall, a telecom analyst at DG Bank in Frankfurt. By continuing to resist, Esser may yet knock Mannesmann's share price down. "He has done well to get more out of Gent," says a German shareholder, "but now is the time to stop fighting and start talking."
The battle isn't over. Many German fund managers see the logic of the deal but fear its hostile nature will trigger management problems. Some international investors also back Esser, such as Hong Kong investment firm Hutchison Whampoa Ltd., which owns a 10% stake in Mannesmann. Still, some analysts estimate that as many as 65% of Mannesmann shareholders will accept Gent's bid. Bankers say if he garners more than 50%, Hutchison won't block the deal.
UNWIRING EUROPE? Acquiring control of Mannesmann would give Vodafone, already the world's biggest cellular company, added heft in Europe. Gent foresees a day when Europeans ditch their fixed-line phones completely: "In Finland, that has already happened. There are 20% of households without fixed lines."
Those cell phones will provide access to the Net--which is why Gent hints that he'll make a big Internet-related deal soon. Vodafone handsets will soon be equipped to navigate the Net with a click or two, while Vodafone software tracks a customer's preferred sites. A Europewide Vodafone network could establish an early edge over major U.S. Internet players, such as AOL and Yahoo! Inc., which are just getting established in Europe. Mannesmann figures hugely in these plans. But with or without Mannesmann, Gent the Dealmaker will keep playing.
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