German politicians on Sunday rallied to the defense of telecommunications and engineering group Mannesmann AG, a flagship of German industry facing a hostile takeover bid by a British company.
The US$128.5 billion bid by Britain’s Vodafone AirTouch is the largest-ever hostile takeover bid. It has been a shock for Germany, where firms are more used to taking over foreign companies than finding themselves targets of companies from abroad.
German Chancellor Gerhard Schroeder repeated his position that he opposed hostile takeovers, although he stopped short of making a statement directly in Mannesmann’s defense.
“It is, for the time being, only an affair between companies. It is something that must be sorted out at a corporate level,” Schroeder told German television during a summit in Florence.
Schroeder said he was in favor of foreigners taking stakes in German companies, but that they must respect Germany’s consensus-based business culture.
“I am for the participation of foreigners in German companies but I set store by there not being hostile takeovers. I am aware that some people view this as nationalism. I have never heard such nonsense. I repeat, no-one should doubt Germany’s internationalism,” he said.
British Prime Minister Tony Blair, also at the summit, countered Schroeder’s statement saying he thought the idea that hostile takeovers destroyed corporate cultures was exaggerated.
“We live in a European market today. We have other European companies taking over British companies and vice versa, that’s part of the European market,” he said.
Schroeder, who has keenly cultivated a pro-business image, is trying to get the European Union to agree, by early December, on new rules that would give new powers to minority shareholders of companies subject to takeover bids.
Under the code, minority shareholders in companies subject to takeover bids could demand cash for their stakes and would not have to be content with shares in the takeover suitor, Focus magazine reported at the weekend.
Vodafone’s offer is made up of shares, not cash.
Wolfgang Clement, a Social Democrat ally of Schroeder, who is also regional state premier of North Rhine-Westphalia where Mannesmann has its headquarters, met Vodafone’s chief executive Chris Gent to discuss the takeover.
He remained opposed to the takeover, however.
“Mannesmann in Duesseldorf should not become a regional subsidiary of a London firm.
“The telecommunications firm Mannesmann is better positioned than the British firm in many markets in Europe. Therefore a hostile takeover bid, where decisions will be made in London and carried out in Duesseldorf, doesn’t make any economic sense,” Clement said in a statement.
Opposition Christian Democrat Juergen Ruettgers, formerly a minister for research and development, feared the takeover would cost thousands of jobs. Welt am Sonntag newspaper on Sunday.
German firms have themselves been involved in high-profile takeovers of foreign firms, including Deutsche Bank’s swoop for Bankers Trust of the United States last year and BMW’s purchase of British car group Rover in 1994.
Britain’s Sunday Business newspaper said Deutsche Telekom AG was believed to be eyeing British telecoms group Cable & Wireless with a view to making a friendly bid.
German companies have traditionally banded together to fight off any potential foreign takeover bids, but the changing global investment environment is making such behavior more difficult.
Copyright 1999 Reuters Limited.
