Vodafone will present the bid to Mannesmann's supervisory board on Friday, but has yet to settle on a final offer. Vodafone is also preparing lucrative incentive packages to lure top Mannesmann executives, led by Klaus Esser, the chief executive, into supporting a higher offer.
Vodafone's first offer, which Chris Gent, the chief executive, presented last Sunday to Mr Esser, was rejected, despite indications it would incentivise key Mannesmann personnel.
"Packages would be commensurate with jobs of that size - salary, pension, share options," said a Vodafone source, commenting on what compensation top Mannesmann executives could expect.
Although share options have spread to the UK from the US, they are rare in Germany. Such a move could provoke a backlash from Mannesmann employees, who hold 10 seats on the company's 20-seat supervisory board. Sources at both groups traded accusations of destroying shareholder value.
A Mannesmann source said that a bid well above the 200 euro level risked destroying 15bn euros of value. "They will be paying a big premium for a group that they want to split up," he said, referring to Vodafone's plans to spin off Orange as well as Mannesmann's fixed-line telecoms interests.
A Vodafone source acknowledged that value would be destroyed, but blamed Mr Esser for paying a premium for Orange, rather than seeking to merge with the UK group.
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