By Patrick Bartlett in Frankfurt

The biggest hostile take-over battle in history enters its final stage.

In Dusseldorf, the German telecommunications and engineering group, Mannesmann,has formally presented its defence against the 135bn euro (£85bn) bid from the British mobile phone company Vodafone Airtouch.

It argues that Vodafone's bid grossly undervalues Mannesmann.

It has told its shareholders to "throw the Vodafone offer in the bin" and plans to float its internet arm to fend off the world's biggest hostile takeover bid.

Culture clash

Behind the detailed arguments, is a battle which strikes at the heart of Germany's consensual business model.

The German Chancellor, Gerhard Schroeder, has said hostile takeovers damage corporate culture.

Chris Gent, the flamboyant, cricket-loving Vodafone boss is seen by many in Germany as a corporate raider.

With his hostile take-over bid for Mannesmann, Mr Gent is attempting what no outsider has yet managed here.

Workers demonstrated against the takeover bid outside Mannesmann's Dusseldorf headquarters.

To them, Vodafone represents an aggressive Anglo-American business culture.

They fear that they will lose their jobs and their influence, if Vodafone wins.

The unions, who in Germany must be consulted about all major company decisions, have the most to lose.

Claus Eilrich, spokesman of the engineering and electrical union, IG Metall, says that Vodafone threatens the consensual business culture which has been the key to Mannesmann's success.

"In principle, we've nothing against foreign companies taking stakes in German firms," he pointed out.

"What we don't like, and what we fear from Vodafone's actions, is that the business culture which has been developed over years at Mannesmann - which takes account of the interests of workers as well as shareholders - will be destroyed by a Vodafone take-over."

German in name only

Mannesmann is the biggest mobile phone company in Germany, and one of the country's most successful businesses.

Although German in name, 60% of Mannesmann's shares are held by overseas investors.

In the global economy, such go-ahead, high-growth companies are an attractive target for foreign predators.

Professor Klandt of the European Business School in Mainz says most of Germany's business community still see hostile take-overs as socially unacceptable.

" We potentially will have a problem in this area. Many German managers will not be very happy. I think it's part of the game and it's not possible to avoid this kind of behaviour," he says.

Increasingly, the new generation of business leaders are questioning the old way of doing business.

Germany's consensual industrial model has brought job security and stability.

Critics say it discourages the risk-taking needed for successful entrepreneurship.

Hugh Herring is a business analyst for the British Chamber of Commerce in Germany.

"Its more bureaucratic. Decisions are taken by many people as opposed to a few people. They are looking for consensus - whether or not to do something. I think what they are missing is the gut feeling its worth taking a risk in order to do a good dea," he says.

The pressure of change is mounting. Gerhard Schroeder, despite his protestations against hostile take-overs, appears to be encouraging change.

The German government, for instance, has proposed a tax reform which would allow banks and other investors to sell their stakes in companies tax free.

The change slipped through almost unnoticed among a raft of tax measures.

Analysts say that this reform could trigger the biggest shake-up in corporate ownership for decades, bringing with it a flood of foreign investment.

Public battle

In newspaper adverts, and in investor briefings around the world, Vodafone and Mannesmann have been publicly slugging it out, in their battle to win over shareholders.

Such high-profile take-over campaigns are a novelty in Germany.

Mannesmann has shown that, when their interests are threatened, Germany's business leaders are increasingly willing to adopt Anglo-American business values.

Klaus Esser, Mannesmann's chairman acknowledges this way of thinking.

" I do not see a difference between a British or a European or German or Italian approach. I think that we may have had in earlier times, national differences in doing business, " he says.

"We are doing business these days for the benefit of shareholders."

The Anglo-American way is still seen by most here as too aggressive.

But German businesses cannot survive in isolation.

In the long-term, accepting hostile take-overs may be the price Germany has to pay to stay competitive in the global economy.