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Friday, 19 November, 1999, 11:15 GMT
Mannesmann fights back

Mannesmann supplies parts to the car industry

Vodafone AirTouch, the world's biggest mobile phone company, has targeted its German rival, Mannesmann, with the highest hostile takeover bid in corporate history. If successful, it would be the first hostile takeover of a German firm by a foreign company. From Frankfurt, the BBC's Europe Business correspondent Patrick Bartlett reports.

Mobile merger battle
The Vodafone offer is being vigorously resisted by Mannesmann, whose supervisory board has been holding an emergency meeting to discuss defence tactics.

Krupp Thyssen Steelmakers Krupp and Thyssen were forced to withdraw a hostile takeover
Mannesmann's response has been swift and unequivocal - Vodafone's offer is too low and unacceptable.

Management and unions, who hold half the seats on the company's supervisory board, are now holding the corporate equivalent of a war council.

No foreign company has yet succeeded with a hostile bid in Germany and Vodafone's predatory swoop has shocked public opinion here.

In the media, it has unleashed a heated debate about globalisation and Anglo-Saxon corporate aggression.

But while the bid has been condemned by left-wing politicians and union leaders, some commentators have welcomed it as helping to counter the "fortress Germany" image of the country's business community.

Criticism mounting

The leading popular daily, Bild, condemned the bid and called for shareholders and the Mannesmann board to resist the bid.

"Will they have to watch, powerless, as a pearl of German industry is sacrificed to greed?," the paper asked.

And German Chancellor Gerhard Schroeder also joined in the criticism.

"Hostile takeovers destroy corporate culture. They harm the target but they also, over the medium term, harm the predator as well. ..I urge the utmost possible caution on those who want to launch into these sorts of adventures," he told a French newspaper.

Companies such as Daimler, BMW and Deutsche Bank have led a recent wave of German takeovers of foreign firms. But German industry has remained largely forbidden territory to outsiders.

An industrial giant

Mannesmann is Europe's biggest mobile phone company, but it also has numerous other interests, particularly in engineering. Vodafone is expected to sell these non-telecoms businesses, prompting fears about job losses.

The firm is one of Germany's oldest industrial concerns, founded in 1885 by Reinhard and Max Mannesmann. It employs 119,000 people and has sales of 19bn euros (13bn).

It has been in the forefront of engineering innovation, and derives about one-third of its revenues from its telecoms business.

Its biggest telecoms coup came when it acquired the mobile phone assets of Olivetti in Italy after Olivetti's successful takeover of Telecom Italia last spring.

Winning over shareholders

The key to success for Vodafone will be winning over Mannesmann's shareholders, many of whom are overseas investors.

But formidable obstacles lie in its way - not least a rule limiting the voting rights of big Mannesmann shareholders to 5%. The takeover battle is expected to rage until at least the New Year.

A large block of shares is also controlled by German financial institutions, including banks and insurance companies, who may be reluctant to sell to foreign interests.
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