Nishtha answered on
Jul 17 2021
VODAFONE AIRTOUCH TAKEOVER MANNESMANN
Table of Contents
Company’s Background 4
Lessons Learnt 6
Business Model 7
Analysis of the Merger 8
In modern contemporary world, where, growing competition and changing technologies are some of the major challenges faced by the businesses, there, the old standards need some modifications with latest solution as well as innovation in order to deal with the problems or tackle them. It normally observed that restructuring of the business is a popular option. In dynamic business world, the company has to undergo with some of the major restructuring that can be takeover or acquisition. As indicated by Daru (2016), while merger is just unification of two or more firms, the takeover allows weaker entity to be financially able or strong as it is now control and manage by strong entity.
When a company experiences financial difficulty in terms of paying debts or realisation of assets, it may consider entering into a process of making changes in the composition of a firm, which known as Corporate Restructuring. It takes place in two forms: Financial Restructuring or Organisational Restructuring. This process will require the support of at least the majority of the key creditors of the company or in extreme scenario when there is a pressure from majority of creditors they can opt for insolvency proceeding. As explained by Varma, Singh and Munjal (2018), restructuring is invariably one of the best options for both companies. It is not only advantageous for the company to continue it is operating and trading business but also provide creditor with the best possibility of being paid.
There are some statutory procedures and legal formalities such as administration or a company voluntary a
angement (CVA), in order to reap the benefits of certain features. The term takeover refers, when an acquiring firm makes a bid with a motive to assume control and management of the target firm. They often purchase majority stake. If takeover happens, the acquiring company is responsible for the all the operation, holdings and debt of the target company. When the target is a publicly traded company, the acquiring company makes an offer for all of the target’s outstanding shares. When a business went into the process of restructuring, the operational cost reduces. Such as the expense of the payroll, if the business dismissed by some of its employees, cost of the company will be save.
Therefore, the cost of maintaining within the retail network will be reduce. Likewise, when business eliminates its layer of management, the communication would be enhances and ba
iers reduces. The restructuring process will enable to build long-range plan for economic success. If the restructuring is happening keeping in mind introducing new technology, it improves the operational efficiency. For example, company merge with other company (technological advanced), they get easy access of more technological equipment and knowledge.
This helps the acquired company to make its data and facts more accurate, accessible and implements efficient computerised filling system in the management. There are many factors consider by the company, when opting restructuring decision. Restructuring decision also worth as sometimes, there are small companies would not able to manage its expenses or give payroll to employee, downsizing can led to negative impact on the employee. At that time, the only decision, which is viable, is to restructure the company. Merge or takeover will turn inefficient firm into efficient firm. The new firm gets benefit of shared knowledge and experience. Moreover, the new firm gets more profit; there would be more investment in research and development.
The company that has undertaken some major changes in its operations for this essay is VODAFONE AIRTOUCH. Vodafone Group is a mobile network company. It is a multinational company operating in various countries around the world. It is one of the largest mobile telecommunication network companies. As informed by Rodrigues (2019), Vodafone cu
ently has equity interests in 27 countries and Partner Networks (networks, in which it has no equity stake) in a further 40 countries. On the other hand, Mannesmann AG is a German base engineering telecommunication company. The company’s core business relate to mobile and fixed telephony. The company operates in some countries through joint venture in France and Austria.
Mannesmann has its own business in USA, UK, Germany and Italy. The merger offer initiated by the company Vodafone at the first place. Vodafone sees this merger as an opportunity for the company to expand the market in one of the dynamic business market that is communication technology. The target country was Europe at that time. In a first place, Mannesmann rejected the proposal. However, in a twist full of events, Mannesmann left, with no choice, than to merge with Vodafone. The audience or the third parties were enraged, as this decision was an anti-competitive.
There were a number of criticisms, which the merging would be a gain of dominant power position. The merger raised the ba
ier of strict entry and exit in the telecommunication market. The case was even
ought to European...