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Court throws out Mannesmann's bid to stop Goldman acting for Vodafone

MANNESMANN, THE German telecoms and engineering group, suffered an embarrassing rebuke yesterday when an injunction it sought to bar Goldman Sachs from advising its rival Vodafone AirTouch was thrown out by the High Court.

The court tussle came as Vodafone directors pondered making a raised pounds 85bn hostile bidfor Mannesmann, which could come today. It would be the largest takeover bid ever.

The judge, Mr Justice Lightman, said Mannesmann's application was "completely hopeless and must be dismissed", and attacked the company for "totally disgraceful and unacceptable conduct".

The injunction dissolved when preliminary claims filed with the court on Monday in a draft affidavit by Klaus Kinzius, managing director of its Eurokom division, were withdrawn.

The changes occurred on Wednesday when the German executive swore a formal affidavit. In his second statement, Mr Kinzius withdrew allegations that he and other Mannesmann executives had met with Goldman and had received assurances that the investment bank would not advise Vodafone in a hostile bid for Mannesmann.

Mr Kinzius acknowledged that he had not witnessed any conversation between Klaus Esser, the Mannesmann chief executive, and Tim Plaut, Goldman's managing director in Frankfurt, but had been informed of the alleged conversations by Mr Esser.

"[Mr Kinzius] says that he has now had the opportunity [on Wednesday] to refresh his memory from his diary and that when preparing the first Kingius affidavit he had confused the occasion when confirmation was given by Mr Plaut," said the judge in his ruling. "This a totally unsatisfactory explanation."

The judge further criticised the behaviour of Mr Kinzius."I regard the placing of this evidence before the court as totally disgraceful and unacceptable conduct," he said. "It raised serious questions as to the integrity of Mr Kinzius and the motive for this application."

Mannesmann, which had been advised by Goldman on its buyout of Italy's Omnitel earlier this year, claimed it had received assurances of an ongoing advisory mandate and that the bank had said it would not act in a hostile bid against a client. Goldman maintained there was no ongoing relationship.

Mr Justice Lightman also refused to accept that Goldman had received confidential information about strategy and tax structures from advising Hutchison Whampoa and Orange in the latter's agreed pounds 20bn buyout by Mannesmann last month.

But the judge said the claim was "academic" since Mannesmann provided no evidence of providing Goldman with any information. He also observed that Mannesmann had itself made the information public by opposing a motion from Goldman to hear the case in private.

"In conclusion, this application is completely hopeless and must be dismissed," the judge said. "It should never have been made." Legal observers said such strident criticism was unusual. The judge ordered the German company to pay both sets of costs and consented to an order of inquiry, which could see Goldman claim for damages or losses resulting from the court action.

Outlook, page 23