Esser rules out white knight bid

MANNESMANN LAST night ruled out seeking a white knight to fend off Vodafone AirTouch's hostile pounds 77bn bid, promising instead to convince shareholders that its future is best served by remaining independent.

Klaus Esser, chief executive of the telecommunications and engineering company, also pledged not to erect legal barriers to frustrate Vodafone's unsolicited offer. Mr Esser said Vodafone's all-paper merger proposal was a "spectacular and risky venture".

Mr Esser made his comments after a meeting of Mannesmann's management board at which directors apparently received news of Vodafone's hostile bid in jocular fashion.

"The management board is laughing its socks off" was the loose translation of how one participant in the meeting described the reaction to the assault launched by Chris Gent, the chief executive of Vodafone.

If such levity is puzzling at what could prove to be a turning point, not only for Mannesmann, but for Germany's consensual industrial model, it also reflects the steely confidence of Mr Esser, the German company's chief executive, that he can see off the Anglo-American invaders.

Last night, Mr Esser formally responded, declaring his optimism that Mannesmann would evade Vodafone. He also claimed the all-paper offer would be a "spectacular and risky" venture, and added even a merger of equals would have little to recommend it.

As Mr Esser, his executive board colleagues and four investment banks plot a defence, there could yet be several twists unfold before any deal is done or ultimately defeated. Although Vodafone yesterday succeeded in the High Court at getting Goldman Sachs back on their side along with Warburg Dillon Read, Mannesmann has assembled an equally high-profile defence team featuring JP Morgan, Merrill Lynch, Morgan Stanley and Deutsche Bank, German's biggest financial institution.

In direct opposition to Mr Gent's assertion yesterday that Vodafone- Mannesmann represents a stronger tie-up than Mannesmann-Orange, Mr Esser is likely to begin his bid defence by highlighting value shortfalls in the UK group's proposal. That pitch is likely to get into full swing next week, once Mannesmann's takeover of Orange becomes unconditional, and legal strictures on what the German company can say publicly are lifted.

It is thought that Mannesmann will launch its defence by arguing there is more value in the company, which includes mobile, fixed-line telecoms and Internet assets in addition to its traditional engineering and automotive businesses, on a stand-alone basis.

Mannesmann and other European fixed line and mobile operators are cross- selling across large customer bases. Bundling packages of services, targeted particularly at high usage customers, can yield more gross operating profit revenue per customer than selling just mobile services.

Moreover, as an all-paper offer, the value of Vodafone's bid depends on the value of its stock. Vodafone shares closed down 8p at 275.5p yesterday, cutting over pounds 2.2bn from its pounds 79bn offer.

Vodafone's bid for Mannesmann also values Orange at nearly pounds 20 per share versus a more likely spin-off price of about pounds 13 - the mobile operator's price before its takeover.

As Mr Esser is thought to have anticipated Vodafone's intentions as long as 18 months ago, it would be surprising had he not discussed such an eventuality with other telecoms company chief executives. It is understood that Rothschilds, bankers to British Telecom, have had several executives working on scenarios where the UK company could become a partner or a white knight.

Most likely, earnings dilution, as Mr Gent reasoned yesterday, would stop BT or US carriers such as SBC Communications, from playing a white knight role. But it would still be possible for Mr Esser to do a joint venture for cash, perhaps spinning off a portion of its Accor and Infostrada fixed line operations to BT.

That would allow Mr Esser to offer cash to Mannesmann shareholders in exchange for staying loyal in the face of Vodafone's challenge. For some shareholders that could prove more attractive.

Executives at Cable & Wireless and MediaOne Group, with whom Mr Esser negotiated about the possible purchase of One-2-One, later snapped up by Deutsche Telekom, found him an able deal maker. "They found Esser a very civilised and professional negotiator," said a source. "They admired his style. Esser has characteristics, unlike other European executives, that US executives have much have in common with. He is easy to talk with on a chief executive to chief executive basis."

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Books should be for everyone, says Els, 8. Publisher Scholastic now agrees
booksAn eight-year-old saw a pirate book was ‘for boys’ and took on the publishers
Life and Style
Mary Beard received abuse after speaking positively on 'Question Time' about immigrant workers: 'When people say ridiculous, untrue and hurtful things, then I think you should call them out'
tech
Life and Style
Most mail-order brides are thought to come from Thailand, the Philippines and Romania
life
News
i100
Life and Style
tech
Voices
Margaret Thatcher, with her director of publicity Sir Gordon Reece, who helped her and the Tory Party to victory in 1979
voicesThe subject is being celebrated by the V&A museum, triggering some happy memories for former PR man DJ Taylor
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Recruitment Genius: Administrator - IFA Based

£22000 - £24000 per annum: Recruitment Genius: This is an opportunity to join ...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions