Vodaphone to make new bid for rival

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The Independent Online

Mobile phone giant Vodafone AirTouch will make a fresh bid to buy German group Mannesmann on Friday, the company said today.

Mobile phone giant Vodafone AirTouch will make a fresh bid to buy German group Mannesmann on Friday, the company said today.

Chris Gent, chief executive at Vodafone, said the company would meet its key shareholders over the next two days to discuss its next move.

Vodafone's board will meet on Thursday and a fresh approach to the German company would be made the next day, Mr Gent said.

Mr Gent made a first approach to Mannesmann at the weekend offering £64 billion to be paid in Vodafone shares.

But the offer was flatly rejected by Mannesmann's board led by chief executive Klaus Esser.

Mr Gent said the company would consider making a hostile bid, but would rather secure Mannesmann's agreement for a deal.

"We would be prepared, if necessary, to proceed with an unsolicited bid, but we would rather that was not the case," he said.

Mannesmann said yesterday it would consider any further approaches by Vodafone as "unfriendly".

The group's first approach to Mannesmann offered 43.7 Vodafone shares for each Mannesmann stock, valuing the German company at £64 billion.

Analyst believe Vodafone would have to raise its bid to as much as £75 billion to win the support of Mannesmann's shareholders against the wishes of its board.

As a first step to prepare for such a battle Vodafone today outlined details of its plans for a merger with Mannesmann which it said would create a world-beating mobile phone company with 42 million customers.

It added that a merger would save the combined companies £500 million a year in 2003 and £600 million in 2004.

And it promised there would be no job cuts if its merger was successful.

Mr Gent said: "The wireless businesses of Mannesmann and Vodafone AirTouch belong together - we have been working together for many years and are natural partners in Europe."

Mannesmann owns mobile business in Germany, Italy and France, in which Vodafone already has minority stakes.

A full merger would give the combined enlarged business mobile phone interests in 15 European countries.

But Mannesmann has shown itself determined to resist Vodafone's approaches.

In a further escalation of the battle between the firms the German company last night won an injunction forcing investment bank Goldman Sachs to stop advising Vodafone over its planned bid, arguing the company faced a conflict of interest.

Goldman Sachs had advised Orange over its deal to merge with Mannesmann for £20 billion last month.

The move will be tested in the High Court on Thursday, but Mr Gent described the legal move by Mannesmann as "defensive and desperate".

Vodafone is still being advised by another investment bank Warburg Dillon Reed.

A takeover of Mannesmann would include all the group's fixed-line telephone business in Germany, its engineering business and another UK mobile phone group Orange.

Orange agreed to a £20 billion takeover by Mannesmann last month.

Vodafone would certainly be blocked from taking control of Orange and said today it would be demerged and ownership given to shareholders in the enlarged Vodafone-Mannesmann business.

Vodafone also said it would continue Mannesmann's stated policy of floating off its engineering business on the German stock market.

But Mr Gent said Vodafone would retain the German company's fixed line telecoms business.

The outline plans for a takeover of Mannesmann were announced as Vodafone unveiled financial results for the six months to September 30 ahead of analysts forecasts.

Before exceptional costs and tax, profits rose to £1.19 billion from £924 million.

The figures were calculated on a pro-forma basis including earnings from US company AirTouch throughout the six months.

Vodafone formally completed in takeover of AirTouch on June 30.

Shareholders will receive an increased interim dividend of 0.655p a share, up from 0.624p for the same period last year.

Worldwide customer numbers reached 31.5 million, up by more than six million over the six months.

In the company's home market of the UK it added 1.29 million customers, giving it 6.86 million subscribers.