Vodafone rebuff sets up record hostile bid

VODAFONE AIRTOUCH was last night gearing up for the largest hostile takeover bid in history after Mannesmann, the German telecoms group, rejecteda merger that would create the world's largest mobile phone company, valued at pounds 160bn.

Chris Gent, Vodafone chief executive, flew to Dusseldorf yesterday afternoon for a meeting with Dr Klaus Esser, chairman of Mannesmann, to discuss a 203-euro-a-share offer, in the form of 43.7 Vodafone shares for each Mannessmann share, valuing the company at pounds 66bn. Each company said the other had made the first move.

The deal under discussion involved Vodafone alone, and did not include a pre-sale of Orange to a third party. The talks followed Mannesmann's agreed pounds 20bn bid for Orange.

British Telecom is waiting in the wings to play white knight, enabling Mannesmann to fend off a hostile bid from Vodafone.

Mr Esser rejected previous approaches from Vodafone following the completion of its merger with AirTouch of the US in July, it emerged yesterday. owever, Mannesmann's move on Orange means Vodafone is likely to go hostile. This would almost certainly prompt a bidding war, with the likes of BT and MCI WorldCom, the US giant, entering the fray.

Mannesmann dismissed reports that it had been in discussions with several white knight bidders, including BT, to fend off Vodafone. BT, which competes with Mannesmann via its 45 per cent stake in Germany's Viag Interkom, declined to rule out a merger with Mannesmann following reports that it had courted the company.

Mannesmann's attraction is its controlling stakes in Omnitel Pronto Italia and Mannesmann Mobilfunk, both leading wireless operators.

"Until the outcome of Mr Gent's meeting is known, BT has nothing to add to the equation. BT is not sitting on its hands," said a company source. However, a BT spokesperson said: "Of course we are interested in developing our activities in Europe, but we already have a partner in Germany."

BT may be forced to make a stock exchange announcement if its share price moves up sharply. But Mannesmann defiantly talked up its future as an independent company. "Our strategy has been to have an integrated telecommunications offer, with both fixed-line and mobile. We are quite sure that this is the right strategy," said Manfred Soehnlein, company spokesman. "Our earnings growth is forecast to be over 60 per cent - that's a 100 per cent more than Vodafone's. Our position in Europe will be greatly strengthened by the acquisition of Orange and our strategy is more promising for our shareholders than any other way."

One Mannesmann source said the company's strength in data and fixed-wire telephony meant Vodafone's exclusive focus on wireless technology made it a strategic misfit. However, a Vodafone spokesman said wireless telephony would soon dominate and was central to all telecoms businesses.

Vodafone has received approaches from several parties interested in Orange should it gain Mannesmann. France Telecom is thought to have had discussions with Vodafone last month over a joint bid for Mannesmann, in which it would take control of Orange. A takeover of Mannesmann would require the divestment of Orange if the acquiring company already has a UK mobile phone licence. The huge premium paid for Orange by Mannesmann suggests a re-flotation of the business is unlikely.

Bid speculation sent Mannesmann shares to a record of 188.5 euros on Friday. There has never been a successful hostile takeover bid within Germany, let alone one from a foreign company. Vodafone's offer would be almost entirely a paper bid.

The largest hostile bid in history, worth $82.4bn, was made two weeks ago by Pfizer, the US pharmaceuticals company, for Warner-Lambert.

Vodafone reports interim results tomorrow, while Orange shareholders vote on Mannesmann's takeover next week.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch
Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

Dame Harriet Walter interview

The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
Art should not be a slave to the ideas driving it

Art should not be a slave to the ideas driving it

Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
Bill Granger recipes: Our chef's winter salads will make you feel energised through February

Bill Granger's winter salads

Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
England vs Wales: Cool head George Ford ready to put out dragon fire

George Ford: Cool head ready to put out dragon fire

No 10’s calmness under pressure will be key for England in Cardiff
Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links