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
News
Courtney Love has admitted using heroin while pregnant with Frances Bean Cobain, her daughter with Kurt Cobain
people
Sport
Murray celebrates reaching the final
tennis
Arts and Entertainment
'The Archers' has an audience of about five million
radioA growing number of listeners are voicing their discontent; so loudly that even the BBC's director-general seems worried
Life and Style
tech
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Extras
indybest
News
Joel Grey, now 82, won several awards for his role in Cabaret
people
Arts and Entertainment
tv
Arts and Entertainment
Henry VIII played by Damien Lewis
tvReview: Scheming queens-in-waiting, tangled lines of succession and men of lowly birth rising to power – sound familiar?
Sport
Harry Kane celebrates scoring the opening goal for Spurs
footballLive: All the latest transfer news as deadline day looms
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

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Day In a Page

Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

Devil in blue Costa is a reminder of what Liverpool have lost

The Reds are desperately missing Luis Suarez, says Ian Herbert
Ashley Giles: 'I'll watch England – but not as a fan'

Ashley Giles: 'I'll watch England – but not as a fan'

Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness