Vodafone cools on launch of hostile bid for Mannesmann

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The Independent Online

Chris Gent, chief executive of Vodafone AirTouch, the world's biggest mobile phone group, is understood to have gone cool on launching a hostile bid for Mannesmann, the German telecom and engineering group that unveiled an agreed £18.2bn for Orange last week.

Chris Gent, chief executive of Vodafone AirTouch, the world's biggest mobile phone group, is understood to have gone cool on launching a hostile bid for Mannesmann, the German telecom and engineering group that unveiled an agreed £18.2bn for Orange last week.

Sources close to Vodafone, a minority shareholder in the Dusseldorf-based firm's German and Italian mobile subsidiaries, admit that the Orange deal has dealt a serious blow to the mobile group, which has been mulling a bid approach to Mannesmann for some months. However, Vodafone believes that Mannesmann is far from holding all the cards. "It's all about the end game," said an insider. "People are being very patient."

Goldman Sachs, the investment bank, has over the past few days been looking at possible angles for a hostile bid for Mannesmann. However, the complex nature of German corporate structure - with union representatives on the board and a 5 per cent limit on outside shareholders - make it difficult to see how an outright hostile bid would succeed.

Mr Gent's preference, say City insiders, would be to lobby Mannesmann shareholders with a view to persuading them to put pressure on the German company's management to consider an agreed deal with Vodafone.

Vodafone's partnerships with Mannesmann are seen to give ample opportunity for on-going discussions involving Mr Gent and Klaus Esser, the German company's chairman.

Insiders note that the pace of consolidation in the sector over the next year could see the German and British companies become more closely aligned.

Weekend reports that Mannesmann may rename itself Orange AG and seek London and New York listings, while keeping its primary listing in Frankfurt, could eventually make the company an easier bid target. "If they did that it could make them more vulnerable," said an analyst.

Industry watchers expect Vodafone and several other big telecom carriers, including BT, which is already aligned with AT&T, Japan NTT, WorldComm and a handful of others with market valuations above $100bn, to determine the industry's global structure. They expectmany minority shareholders in mobile carriers to sell out, given their comparative lack of financial resources to go head-to-head with the industry giants.

In the near term, Vodafone is expected to seek to increase its holdings where it can, as well as obtain new licences when they become available. And next year, when third generation, high-capacity mobile licences begin to be auctioned, there is also the question of how the company will position itself as mobile changes early the next century from a voice service to an Internet based interactive and transactional service.

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