Vodafone faces pounds 400m bill as it posts bid for Mannesmann

VODAFONE AIRTOUCH is paying advisory fees totalling pounds 400m in relation to its record-breaking hostile bid for Mannesmann, the German telecoms and engineering group, and the merger of its US mobile operations with those of Bell Atlantic.

The huge scale of the fees, the largest ever for a bid launched from the UK, emerged yesterday as Vodafone posted its formal offer document to Mannesmann shareholders, firing the starting gun on a 46-day bid period.

Vodafone declined to provide a break-down of the pounds 400m in fees. However, it is understood that the vast bulk relate to investment banking and other advice on the pounds 83bn Mannesmann bid. Its two principal advisers are Goldman Sachs and Warburg Dillon Read. Its lawyers are Linklaters and its accountants are Deloitte & Touche.

The 46-page offer document also reveals that extensive contacts had taken place between Vodafone and Mannesmann months before the hostile bid was launched.

They began last January when Klaus Esser, the Mannesmann chief executive, telephoned Chris Gent, his Vodafone counterpart, to ask whether he was planning a bid. Subsequent talks concerned the potential for the two companies taking cross-shareholdings. They only broke off in October when Mr Esser telephoned Mr Gent to cancel a planned meeting because he had already agreed to make an offer for Orange.

Yesterday, meanwhile, Mr Gent urged Mannesmann to engage in talks and offered seats on the proposed enlarged company's board. "We would certainly envisage bringing on representatives of Mannesmann to our board," he said.

Mr Gent also kept the door open for Mr Esser. "So far as Dr Esser is concerned, it's a matter for him. Certainly an opportunity for him to participate remains open."

The Vodafone chief defended the nature of the bid approach. "This is not hostile as hostile takeovers used to be. This is not (about) factory closing, job cuts. It is about being part of a global group with enhanced prospects for Mannesmann and Mannesmann shareholders."

He also defended his own role, which has been under attack in the German media. "As you can see, I'm not a ruthless shark," he told a press conference in Mannesmann's home town of Dusseldorf.

Last night, Mannesmann reiterated its opposition to Vodafone. "Mannesmann regrets that Vodafone's management has decided to deliver its hostile approach on Christmas Eve without adding anything of substance to its original, unsatisfactory offer."

It said the value of Vodafone's all-paper 53.7 share bid was worth 13 per cent less than when the offer was launched in November. Since then, Mannesmann claimed its shares have matched the 25 per cent rise in the Dow Jones Stoxx European telecoms index, while Vodafone stock had risen by just 12 per cent.

Sources said the offer "glossed over" how Vodafone would separate Orange out of Mannesmann, a regulatory necessity since one company is not allowed to own two UK mobile licences. They suggested Vodafone, should it win only a slender majority approval, would have to pay up to pounds 26bn in cash to Mannesmann shareholders to take full control of Orange before demerging it.

Should Vodafone's offer succeed, it has proposed to set up a separate listing on the Frankfurt stock exchange. However, it emerged that Mannesmann shareholders who wish to repatriate Vodafone stock, whether to the US or Germany, will face a 1.5 per cent stamp tax charge that could cost pension funds hundreds of millions of pounds.

Vodafone stock closed up 9p at 305.75p, while Mannesmann ended at 237.8 euros, up 3.8 euros. That leaves Mannesmann stock about 9 per cent below the current bid value of 263 euros per share. Mr Gent said the narrowing of the gap showed the market expected the bid to succeed.

Outlook, page 13

HOW GENT STALKED HIS TARGET

January, 1999: Mannesmann's chief executive, Klaus Esser, telephones Vodafone's chief executive, Chris Gent, to ask whether it is planning a takeover bid.

6 May, 1999: Gent and Esser meet in Dusseldorf to discuss co-operation, including the potential for cross-shareholdings.

25 May, 1999: Vodafone executives and members of Mannesmann management board meet to discuss partnership interests.

8 September, 1999: Senior Vodafone and Mannesmann executives meet. Gent telephones Esser to ask about Mannesmann's bid for Orange and suggest a "more constructive route" for the two companies.

20 October, 1999: Gent and Esser agree to meet to discuss "co-operative" ways forward. Esser later cancels meeting after signing deal to buy Orange.

22 October, 1999: Gent hires Goldman Sachs and Warburg Dillon Read to act as advisers on a bid for Mannesmann

14 November, 1999: Gent meets Esser in Dusseldorf and sets out the case for a merger. Esser rejects the advance and files High Court injunction seeking to prevent Goldman Sachs from acting as adviser.

19 November, 1999: Vodafone launches pounds 79bn all-share offer. Mannesmann management board rejects it.

28 November, 1999: Mannesmann supervisory board also rejects the bid.

23 December, 1999: Vodafone issues formal offer document, starting the clock on 45-day bid.

7 February 2000: Vodafone offer closes.

Arts & Entertainment
tvGrace Dent on TV
Voices
Actor Zac Efron
voicesTopless men? It's as bad as Page 3, says Howard Jacobson
Sport
Emmanuel Adebayor, Tim Sherwood and Hugo Rodellega
sportThe latest news and scores
News
Brand said he
people
VIDEO
Voices
For the Love of God (2007) The diamond-encrusted skull that divided the art world failed to sell for
its $100m asking price. It was eventually bought by a consortium
which included the artist himself.
voicesYou can shove it, Mr Webb – I'll be having fun until the day I die, says Janet Street-Porter
Sport
Mercedes driver Lewis Hamilton of Britain drives in the rain during the qualifying session of the Chinese Formula One Grand Prix in Shanghai
sport
Extras
indybestFake it with 10 best self-tanners
Arts & Entertainment
Madonna in her music video for 'Like A Virgin'
music... and other misheard song lyrics
News
Much of the colleges’ land is off-limits to locals in Cambridge, with tight security
educationAnd has the Cambridge I knew turned its back on me?
Sport
Steven Gerrard had to be talked into adopting a deeper role by his manager, Brendan Rodgers
sportThe city’s fight for justice after Hillsborough is embodied in Steven Gerrard, who's poised to lead his club to a remarkable triumph
News
peopleOrlando Bloom the pin-up hero is making a fresh start
News
Who makes you happy?
happy listSend your nominations now for the Independent on Sunday Happy List
Life & Style
The North Korean TV advert for Taedonggang beer, that became a YouTube hit
food + drinkAnd what did it take to set up a taste test back in Wiltshire?
Arts & Entertainment
filmLife for Leslie Mann's can be challenging sometimes
Voices
For music lovers: John Cusack with his vinyl collection in 'High Fidelity'
voices...but don't forget rest of the year
News
The energy drink MosKa was banned for containing a heavy dose of the popular erectile dysfunction Levitra
news
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

1st Line Helpdesk Engineer Apprentice

£150.00 per week: QA Apprenticeships: This company has been providing on site ...

Telesales & Sales Support Apprentice

£221.25 per week: QA Apprenticeships: This company is a well established Inter...

Client Relationship Manager - SQL, Python

£40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...

**Financial Services Tax**

£35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...

Day In a Page

How I brokered a peace deal with Robert Mugabe: Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC

How I brokered a peace deal with Robert Mugabe

Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC
Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'

British Muslims's Happy video attacked as 'sinful'

The four-minute clip by Honesty Policy has had more than 300,000 hits on YouTube
Church of England-raised Michael Williams describes the unexpected joys in learning about his family's Jewish faith

Michael Williams: Do as I do, not as I pray

Church of England-raised Williams describes the unexpected joys in learning about his family's Jewish faith
A History of the First World War in 100 moments: A visit to the Front Line by the Prime Minister's wife

A History of the First World War in 100 moments

A visit to the Front Line by the Prime Minister's wife
Comedian Jenny Collier: 'Sexism I experienced on stand-up circuit should be extinct'

Jenny Collier: 'Sexism on stand-up circuit should be extinct'

The comedian's appearance at a show on the eve of International Women's Day was cancelled because they had "too many women" on the bill
Cannes Film Festival: Ken Loach and Mike Leigh to fight it out for the Palme d'Or

Cannes Film Festival

Ken Loach and Mike Leigh to fight it out for the Palme d'Or
The concept album makes surprise top ten return with neolithic opus from Jethro Tull's Ian Anderson

The concept album makes surprise top ten return

Neolithic opus from Jethro Tull's Ian Anderson is unexpected success
Lichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines

Lichen is surprise new ingredient on fine-dining menus

Emily Jupp discovers how it can give a unique, smoky flavour to our cooking
10 best baking books

10 best baking books

Planning a spot of baking this bank holiday weekend? From old favourites to new releases, here’s ten cookbooks for you
Jury still out on Manchester City boss Manuel Pellegrini

Jury still out on Pellegrini

Draw with Sunderland raises questions over Manchester City manager's ability to motivate and unify his players
Ben Stokes: 'Punching lockers isn't way forward'

Ben Stokes: 'Punching lockers isn't way forward'

The all-rounder has been hailed as future star after Ashes debut but incident in Caribbean added to doubts about discipline. Jon Culley meets a man looking to control his emotions
Mark Johnston: First £1 million jackpot spurs him on

Mark Johnston: First £1 million jackpot spurs him on

The most prize money ever at an All-Weather race day is up for grabs at Lingfield on Friday, and the record-breaking trainer tells Jon Freeman how times have changed
Ricky Gervais: 'People are waiting for me to fail. If you think it's awful, then just don't watch it'

Ricky Gervais: 'People are waiting for me to fail'

As the second series of his divisive sitcom 'Derek' hits screens, the comedian tells James Rampton why he'll never bow to the critics who habitually circle his work
Mad Men series 7, TV review: The suits are still sharp, but Don Draper has lost his edge

Mad Men returns for a final fling

The suits are still sharp, but Don Draper has lost his edge
Google finds a lift into space will never get off the ground as there is no material strong enough for a cable from Earth into orbit

Google finds a lift into space will never get off the ground

Technology giant’s scientists say there is no material strong enough for a cable from Earth into orbit