Telecoms group launches £79bn bid for German rival

Telecoms group Vodafone AirTouch today announced plans to launch a hostile £79 billion takeover offer for Germany's Mannesmann.

Telecoms group Vodafone AirTouch today announced plans to launch a hostile £79 billion takeover offer for Germany's Mannesmann.

The offer will be the largest hostile takeover bid in history.

Having failed to win over Mannesmann's board, the British group is approaching the target's shareholders directly.

The combined operation would be the world's leading international mobile phone group, with more than 42 million customers worldwide.

If the German shareholders accept the deal, Vodafone would win control of Orange, the British operator recently bought by Mannesmann for £22 billion.

The move would create savings and cost benefits of at least £500 million after it had bedded down in 2003, and £600 million in 2004.

It would create no redundancies, Vodafone AirTouch pledged.

Chris Gent, chief executive of Vodafone AirTouch said that it the offer succeeded it would demerge Orange and allow it to be run as a separate company, with the benefits going to shareholders in the combined group.

He said a "friendly" offer made last Sunday was rejected by Mannesmann.

Yesterday his company received a letter from the German group's chairman, Klaus Esser, "making it clear he had no interest in a constructive discussion."

"We think this is a very good offer. It is our final offer and we expect to gain support from the Mannesmann shareholders," he said.

Details would be posted to investors at the weekend.

The offer will be 53.7 Vodafone AirTouch shares for each Mannesmann share and would give the German company's shareholders about 47.2% of the combined group.

After the deal and the Orange demerger, Vodafone AirTouch would control four of Europe's biggest mobile operators, including D2 in Germany and Omintel in Italy.

Yesterday, Mannesmann suffered a humiliating defeat in the UK High Court over its effort to stop investment bank Goldman Sachs advising Vodafone in its bid plans.

Mannesmann had complained that the bankers had access to confidential information about the German company, having acted for it in the past, and so should not be allowed to advise in the takeover bid.

But Goldman Sachs's counsel, Lord Goldsmith QC, described the court move as a "spoiling tactic" designed to cause maximum disruption to Vodafone.

The judge, Mr Justice Lightman, agreed and released the bankers from an earlier court undertaking not to advise Vodafone.