Mannesmann/Orange No Domination Agreement Required
Vodafone AirTouch PLC
24 January 2000
VODAFONE AIRTOUCH CONFIRMS NO DOMINATION AGREEMENT REQUIRED
Vodafone AirTouch has today published the opinions of its
leading German Counsel on its website, These opinions, the
summaries of which are set out below, confirm that Vodafone
AirTouch will not need to put in place a domination
agreement in order to de-merge Orange. Accordingly no cash
payment will be required to any minority shareholders in
Mannesmann. Vodafone AirTouch has today published the
opinions of its leading German counsel (Professors Ulmer,
Hueffer, Hirte and Noack) on its website, www.vodafone-
update.com. These opinions confirm that Vodafone AirTouch
will not need to put in place a domination agreement in
order to demerge Orange. Accordingly, no cash payment will
be required to be made to any minority shareholders in
Mannesmann.
The conclusions of each opinion are summarised as follows:
Professor Ulmer
'Vodafone, after gaining a majority interest in Mannesmann
through the Offer, is not prevented under stock corporation
law to cause the management board of Mannesmann to dispose
of the Orange interest. This is an individual measure the
economic consequences of which can be evaluated and to which
Sec. 311 AktG applies and which therefore can be initiated
by the controlling company. The conclusion of a domination
agreement is not required for this purpose.'
Professor Hueffer
'With regard to the present facts I cannot see that the
lawful de-merger of Orange from Mannesman is a measure which
legally requires a domination agreement. Financial
obligations of Vodafone, if any, can be compensated for
under sec. 311 AktG.' Professor Ulmer
'Vodafone, after gaining a majority interest in Mannesmann
through the Offer, is not prevented under stock corporation
law to cause the management board of Mannesmann to dispose
of the Orange interest. This is an individual measure the
economic consequences of which can be evaluated and to which
Sec. 311 AktG applies and which therefore can be initiated
by the controlling company. The conclusion of a domination
agreement is not required for this purpose.'
Professor Hueffer
'With regard to the present facts I cannot see that the
lawful demerger of Orange from Mannesman is a measure which
legally requires a domination agreement. Financial
obligations of Vodafone, if any, can be compensated for
under sec. 311 AktG.'
Professor Hirte and Professor Noack
'The conclusion of a domination agreement is not required in
order to gain control over a stock corporation.'
'The induced sale of the subsidiary 'Orange' for an adequate
price is not a disadvantageous legal transaction according
to sec. 311 para. 1 AktG (Aktiengesetz - German Stock
Corporation Act). The term 'disadvantage' includes the
situation where an orderly and conscientious director of an
independent company should have abstained from that
transaction. The sale of Orange could not be regarded as
contrary to Mannesmann's board of directors' duties
according to sec. 93 AktG. Therefore, no domination
agreement is required for this transaction.'
Vodafone AirTouch's legal advisers, together with Professors
Ulmer, Hueffer, Hirte and Noack, have also reviewed the
arguments put forward by Mannesmann and its legal counsel
regarding the de-merger of Orange. The Vodafone AirTouch's
legal advisers, together with Professors Ulmer, Hueffer,
Hirte and Noack, have also reviewed the arguments put
forward by Mannesmann and its legal counsel regarding the
demerger of Orange. The statement by the Mannesmann
Management Board, made in its press release of 19 January
2000, that a domination agreement is required to de-merge
Orange, is an incorrect statement of German Corporate Law.
The Mannesmann position is based principally principally on
the argument that the value of Orange to Mannesmann cannot
be quantified. However, the requirements of the German Stock
Corporation Act are satisfied if a value can be determined
based on business plan projections. Such projections are
part of the normal responsibility of a company's management
board.
Mannesmann's argument is plainly wrong and
contradictoryclearly misleading:
* Only three months ago, the Mannesmann Management Board
valued Orange in connection with its acquisition. This
valuation must have reflected an assessment of the value
of any strategic benefits and synergies arising from the
future combination of Mannesmann and Orange.
* The valuation of a company such as Orange is a standard
exercise. Such valuations are routinely carried out in
Germany by professional auditors and take into account the
value of any strategic benefits and synergies.
* Independent research analysts are able to attribute a
value to Orange as part of the Mannesmann group.
* In its own defence document, the Mannesmann Management
Board has published synergies attributable to Orange. In
addition, Mannesmann valued its mobile business including
Orange. Furthermore, Mannesmann has attempted to justify
specific share price targets based, in part, on the
quantifiable impact of Orange on Mannesmann. In
contrast, Mannesmann's key legal argument has been that
any estimate of the impact of Orange on Mannesmann '.would
be merely arbitrary' (quote from the legal opinion
referred to in the Mannesmann press release dated 19
January 2000).
* The flaws in the Mannesmann Management Board's argument
are highlighted by the fact that there would need to be a
valuation of Mannesmann, including Orange, in order to
compensate minority shareholders if a domination agreement
between Vodafone AirTouch and Mannesmann were to be
implemented. This would require a valuation of Mannesmann,
including Orange, taking into account any strategic
benefits and synergies arising from the combination.
However, this is precisely what Mannesmann's Management
Board claims is not possible.
The legal opinions of Professors Ulmer, Hueffer, Hirte and
Noack can be obtained from the Vodafone AirTouch website,
www.vodafone-update.com.Chris Gent, Chief Executive of
Vodafone AirTouch, commented:
'Mannesmann management's reliance on flawed legal arguments
demonstrates its lack of conviction in its strategic and
valuation arguments. We have received clear German legal
advice that our plan to de-merge Orange works. Mannesmann
shareholders should not be distracted and should instead
focus on the outstanding opportunity presented to them to
create a global mobile telecoms leader. I urge them to
accept our offer without delay.'
Appendix 1: German Legal Professors' Biographies
Professor Ulmer
Prof. Dr. Dr. (multiple Honorary Degrees) Peter Ulmer, 67,
has been Professor of Commercial and Corporate Law at the
Ruprecht Karls University of Heidelberg since 1975, and was
also Rector of the University for several years. He is also
Director of the Institute for German and European Corporate
and Commercial Law, and editor and author of leading
commentaries on German Corporate Law. Prof. Ulmer was rated
the most highly-regarded German Law Professor in 1997 by
Manager Magazine.
Professor Hueffer
Prof. Dr. Uwe Hueffer, 65, has been Professor of Civil and
Commercial Law at the Ruhr University of Bochum since 1985.
He is Judge of the Hamm High Court, and the author of one of
the leading commentaries on the German Stock Corporation Law
(Uwe Hueffer, Aktiengesetz, 4th edition, 1999).
Professor Hirte
Prof. Dr. Heribert Hirte LL.M (Berkeley), 41, is Professor
of German and European Civil and Commercial Law at the
Friedrich Schiller University of Jena, a post he has held
since 1993. He has been deputy Chairman of the German-
American Association of Lawyers since 1994, and is the
author of several publications on Corporate Law, e.g. aThe
tTextbook on Stock Corporation Law, and co-author of a
commentary on Stock Corporation Law (Grosskommentars zum
Aktiengesetz).
Professor Hueffer
Prof. Dr. Uwe Hueffer, 65, has been Professor of Civil and
Commercial Law at the Ruhr University of Bochum since 1985.
He is Judge of the Hamm High Court, and the author of one of
the leading commentaries on the German Stock Corporation Law
(Uwe Hueffer, Aktiengesetz, 4th edition, 1999).
Professor Noack
Prof. Dr. Ulrich Noack, 44, is Professor of Civil and
Commercial Law at the Heinrich Heine University of
Duesseldorf, a position he has awarded in 1994. He is a
Board member of the German Association for Shareholder
Protection (DSW, Deutsche Schutzvereinigung fuer
Wertpapierbesitz), and the co-author of one of the leading
commentaries on the German Stock Corporation Law (Kolner
Kommentar).
Copies of this press release and the documentation published
in connection with the Offer can be obtained from the
Vodafone AirTouch website, www.vodafone-update.com, or by
calling one of the dedicated helplines, toll-free, on 0800
169 2853 in the United Kingdom or 0800 088 7766 in Germany.
Enquiries:
Vodafone AirTouch
Terry Barwick
Director of Corporate Affairs
Tim Brown
Investor Relations Director
Melissa Stimpson
Senior Investor Relations Manager
Mike Caldwell
Corporate Communications Director
Tel: +44 (0)1635 33 251
Goldman Sachs International
Scott Mead
Simon Dingemans
Tel: +44 (0)171 774 1000
Warburg Dillon Read
Warren Finegold
Mark Lewisohn
Tel: +44 (0)171 567 8000
Tavistock Communications
Lulu Bridges
Tel: +44 (0)171 600 2288
Financial Dynamics
Perry Hall
Tel: +49 69 971 68123
Words defined in the press release dated 18 January 2000
shall have the same meaning in this announcement unless the
context requires otherwise.
This press release does not constitute an offer to exchange
or sell or an offer to exchange or buy any securities.
The contents of this announcement have been approved by
Goldman Sachs International and Warburg Dillon Read, the
investment banking division of UBS AG, solely for the
purposes of Section 57 of the Financial Services Act 1986.
Goldman Sachs International and Warburg Dillon Read, each of
which is regulated in the United Kingdom by The Securities
and Futures Authority Limited, are acting for Vodafone
AirTouch and for no one else in connection with the Offer
and will not be responsible to anyone other than Vodafone
AirTouch for providing the protections afforded to customers
of Goldman Sachs International or Warburg Dillon Read or for
giving advice in relation to the Offer.
The Offer in the United States is being made through a
prospectus which is part of an effective registration
statement filed with the U.S. Securities and Exchange
Commission. Mannesmann Shareholders who are U.S. persons or
are located in the United States are advised to read the
registration statement because it contains important
information relating to the Offer. You can inspect and copy
the registration statement relating to the Offer and
documents incorporated by reference therein at the public
reference facilities maintained by the U.S. Securities and
Exchange Commission at 450 Fifth Street, N.W., Room 1024,
Washington D.C. 20549. In addition, copies of the US Offer
Document are available from The Bank of New York, 101
Barclay Street, Lobby Window, New York, NY 10286.
For additional information regarding risks, see the
Registration Statement on Form F-4 and other reports of
Vodafone AirTouch Plc on file with the Securities and
Exchange Commission. Copies of these filings are available
on request directed to Vodafone AirTouch, Investor
Relations, Tim Brown (tel: + 44 1635 682 373).
It is the responsibility of any person receiving a copy of
this announcement in any jurisdiction other than the United
Kingdom, Germany and the United States to satisfy themselves
as to the full observance of the laws and regulatory
requirements of the relevant jurisdiction, including the
obtaining of any governmental or other consent which may be
required or observing any other formalities needing to be
observed in such jurisdiction. Receipt of this announcement
will not constitute an offer in those jurisdictions in which
it would be illegal to make such an offer and in such
circumstances it will be deemed to have been sent for
information purposes only.
Statements in this press release relating to future status
or circumstances, including statements regarding future
performance, costs, revenues, cash flows, earnings,
divestments, growth and other trend projections and the
synergistic benefits of the merger are forward-looking
statements. These statements may generally, but not always,
be identified by the use of words such as 'anticipates',
'should', 'expects', 'estimates', 'believes', or similar
expressions. By their nature, forward-looking statements
involve risk and uncertainty because they relate to events
and depend on circumstances that will occur in the future.
There can be no assurance that actual results will not
differ materially from those expressed or implied by these
forward-looking statements due to many factors, many of
which are outside Vodafone AirTouch's control, including
steps that Mannesmann's management may take to frustrate
Vodafone AirTouch's efforts to obtain managerial control of
Mannesmann, increase the costs or reduce the benefits of the
transaction, the triggering of change of control provisions
in Mannesmann's licences or other agreements, the ability to
obtain regulatory approvals without onerous conditions, the
impact of labour disputes, the risk of negative impacts on
Vodafone AirTouch's credit ratings, the potential costs,
including tax costs, of divesting Orange and Mannesmann's
industrial businesses, limitations on Vodafone AirTouch's
ability to control Mannesmann due to voting restrictions and
other provisions of Mannesmann's charter and German law,
general economic conditions, competition, technical
difficulties and the need for increased capital expenditure
(such as that resulting from increased demand for usage, new
business opportunities and deployment of new technologies)
and the ability to realise benefits from entering into
partnerships for developing data and internet services.
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