Mannesmann to buy Orange for $US33 billion

Germany's Mannesmann late on Wednesday said it will purchase UK mobile phone carrier Orange in a stock and cash offer valued at 19.8 billion pounds ($US33 billion).

The move was not unexpected, as Mannesmann earlier had confirmed that it was in negotiations to purchase the UK carrier.

For each Orange share, Mannesmann is offering .0965 of new Mannesmann shares, as well as 6.40 British pounds ($US10.50) in cash, according to a Mannesmann statement. The offer represents a 21.6 percent premium over the 13.39-pound closing price for Orange shares on October 18, Mannesmann said.

Orange's board of directors has deemed the offer fair, and will recommend that shareholders accept the offer, according to Mannesmann.

Hutchison Whampoa, Orange's largest single shareholder, has agreed to sell its 44.8 percent stake in the UK carrier to Mannesmann, the statement said. In exchange, the Hong Kong-based company will also get a ten percent share in the German company, making it the largest single shareholder.

Hutchison's offer to sell its shares to Mannesmann is binding, even if a third-party makes a higher offer for Orange, Mannesmann said.

British Aerospace also owns five percent of Orange, while the remainder is owned by private and institutional investors. For the cash portion of the offer, Orange shareholders have the right to receive half in floating rate notes, rather than as cash, the statement said.

If successful, the deal brings Mannesmann's total mobile phone customer base in Europe to 20 million, Mannesmann said. Orange itself owns interests in mobile communications companies in France, Germany, Belgium, Switzerland and Austria. It is the third largest mobile carrier in the UK, with 3.5 million customers and a market share of 17 percent, Mannesmann said in the statement..

Mannesmann is the largest shareholder in Germany's top mobile carrier, Mannesmann Mobilfunk, whose D2 network has 8 million subscribers. Mannesmann Mobilfunk's other shareholder is the UK's Vodafone AirTouch, and rumours have swirled that Vodafone might also be interested in acquiring either Orange or Mannesmann.

Mannesmann also owns interests in Italian mobile company Omnitel-Pronto Italia.