Vodaphone outlines plans for Mannesmann merger

Mobile phone giant Vodafone AirTouch today outlined its plans for a merger with Germany's Mannesmann, promising to create a world leading company with 42 million customers.

Mobile phone giant Vodafone AirTouch today outlined its plans for a merger with Germany's Mannesmann, promising to create a world leading company with 42 million customers.

The company said a merger, so far rejected by Mannesmann, would create savings of more than £500 million and would require no job losses.

But the British phone company stopped short of launching a fresh offer for the German company as some observers had expected.

Mannesmann rebuffed a £64 billion approach from Vodafone at the weekend describing the offer as 'wholly inadequate'.

Chris Gent, chief executive of Vodafone said: 'The wireless businesses of Mannesmann and Vodafone AirTouch belong together - we have been working together for many years and are natural partners in Europe.'

A merger would create a company with mobile phone interests in 15 European countries with 30 million customers.

Worldwide the group would have the equivalent of 42 million customers.

Vodafone said a merger would allow savings of £500 million in 2003 and £600 million in 2004.

But Mannesmann has shown itself determined to resist Vodafone's approaches.

In a further escalation of the battle between the firms the German company last night reportedly forced investment bank Goldman Sachs to stop advising Vodafone over its planned bid, arguing the company faced a conflict of interest.

Goldman Sachs had advised Orange over its deal to merge with Mannesmann for £20 billion last month.If successful in its attempt to take over Mannesmann, competition watchdogs would certainly insist it disposed of Orange.

In its outline proposals today Vodafone said it would demerge Orange from the Mannesmann business and sell the group back to shareholders in Vodafone and Mannesmann.