Outlook: Dear diary, we're winning the mobile bid battle

ONE GLANCE at the astronomic fees Vodafone AirTouch is paying its advisers on the Mannesmann bid explains how Goldman Sachs came to top the European M&A rankings this year. Once upon a time pounds 400m would have been sufficient to acquire a decent-sized company. These days it is barely enough to pay off the investment banks, lawyers and financial PRs once the meter starts running.

Nevertheless, the 46-page offer document that all these bloated fees helped produce is a nifty piece of work. The chronology at the front, detailing how regularly Vodafone and Mannesmann have met up to discuss merger possibilities in the last year, does not exactly help the Germans' case for remaining independent.

Chris Gent's frequent Dear Diary entries, going back to last January, also make it obvious that a bid for Mannesmann was not a knee-jerk reaction to the Germans' acquisition of Orange but part of a thought-out strategy.

The posting of the offer document marks the official start of hostilities and, for the first time, Vodafone is on the front foot. Thus far its performance has been stumbling. It failed to anticipate the degree of political and union opposition in Germany. It antagonised Brussels by declaring that its bid was not conditional on European Commission clearance. It also put a spanner in the Government's timetable for auctioning off third-generation mobile licences.

However, Vodafone has so far managed not to alienate what ought to be the most important constituent in this takeover battle - Mannesmann's shareholders. The narrowing of the gap between the value of Vodafone's offer and Mannesmann's market price, points in the direction of victory for Mr Gent.

He is also helped by Germany's poorly constructed takeover code. This means that most shareholders won't get to read the long list of health warnings contained in the 460-pages of listing particulars. Nor will they need to bother their heads with Vodafone's vague plan about how to deal with Orange, once the takeover is completed.

This being Germany, however, Mr Gent may still be none the wiser as to who is the victor come day 46. The political pressure on Brussels to pack the deal off for a four-month investigation will be intense. Vodafone could yet squeeze around that by sweetening its offer with some cash and gaining a recommendation from the Mannesmann board. But it may be too late for that.

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