Vodafone offer to save pounds 600m

VODAFONE will this week fire the first formal shot of its pounds 93bn hostile takeover bid for Mannesmann with the release of its offer document for the German telecoms group.

Chris Gent, Vodafone's chief executive, is likely to spell out a strategy designed to reap pounds 600m of annual savings from a deal which would be the largest hostile takeover in corporate history. Vodafone will confirm a plan to retain Mannesmann's fixed-line businesses but float off those in which the combined group has only a minority interest.

The document will also underline Vodafone's intention to demerge Orange in preference to finding a trade buyer for the British mobile phone group. It was Mannesmann's acquisition of Orange, arousing fears that the German group would gain a dominant position in the European cellular phone market, which last month prompted Vodafone to launch its bid. However, there are concerns that Vodafone will struggle to recoup the implicit premium it is paying for Orange, which has to be disposed of under rules barring a company from owning two mobile phone licences in the UK.

Vodafone may also detail who will fill the key executive positions in the merged companies. Previously it has indicated that senior Mannesmann managers will be offered roles.

The publication of Vodafone's offer document will kick start a bid period which, under German takeover rules, could last up to two months. Mannesmann's chief executive, Klaus Esser, dashed hopes of an agreed deal on Friday with a pledge to resist Vodafone's advances. Mr Esser is insisting that Vodafone must raise its bid by at least pounds 25bn before he will consider a recommendation.

Mr Gent needs to persuade 50.1 per cent of Mannesmann's shareholders in order to secure control. However, at least one shareholder will side with Mr Esser - Hutchison Whampoa, the Hong Kong investment group, which owns 10 per cent.

It is likely that most other shareholders will wait to see what happens to Vodafone shares during the course of the bid period before deciding which way to vote.

Vodafone is also flying in the face of the corporate national culture that has never approved of hostile acquisitions. Gerhard Schroder, the German Chancellor, has already indicated his opposition to unsolicited takeover bids.

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