Embattled German conglomerate Mannesmann is mulling the options as the deadline for deciding on Vodafone's takeover bid approaches.

With less than a week to go before shareholders must decide, UK mobile phone company Vodafone Airtouch appears to have the edge in Europe's largest contested takeover.

The £83bn bid would create the EU's biggest telecoms firm.

Vodafone has come an arrangement with French telecoms company Vivendi, whom Mannesmann was hoping would do a deal with instead.

Vodafone's deal with Vivendi to create a Europe-wide internet service and pool their resources to build a continent-wide fixed-line phone network appeared to undercut one of Mannesmann's main lines of defence, Vodafone's lack of internet capacity.

"Mannesmann has been sounding more and more desperate lately and with this news, the Vodafone bid is clearly looking more likely to succeed," a dealer from a large Frankfurt-based U.S. bank said.

Shares in Mannesmann rose sharply on Monday on the Frankfurt exchange, gaining 3.4% to 277 euros.

Analysts suggested that Mannesmann chief executive Klaus Esser will have little choice now but to sit down and talk to his counterpart Chris Gent.

"From a shareholders' point of view, if Mannesmann is going to look after its investors, now is the time to sit down with Vodafone and thrash out some recommended deal," said Tressan McCarthy, of Credit Lyonnais Securities.

Vodafone is reportedly offering Mannesmann shareholders a 49% stake in the new company, if management recommends a friendly merger.

Good deal for Vivendi

The chairman of Vivendi, Jean Marie Messier, said the company's joint venture with Vodafone opened the way for market dominance in the field of internet access.

In an interview with French daily Le Monde, Mr Messier said he hoped Mannesmann would now accept Vodafone's takeover bid.

"If this battle can be ended in a friendly fashion, it will be easier to work together in the internet age," he said.

French dealers said they believed Vivendi was right to reject a deal with Mannesmann in favour of Vodafone.

A dealer from a German bank in Munich said: "It really isn't looking too good for Mannesmann. All those things they said last week about the internet sounded a bit desperate and this news looks like a bad blow for them," he said.

Last week, Mannesmann announced a series of internet-based initiatives including a banking tie-up with Deutsche BAnk AG and talks with AOL Europe.

White Knight no more

Until Saturday there had been loud rumours in the French and German media that Vivendi could act as a "white knight" for Mannesmann, rescuing the firm from Vodafone's unwanted attention.

Vivendi and Mannesmann are partners in French mobile phone company Cegetel.

Any such hopes by the Mannesmann management have now been dashed.

At the same time, the venture will bolster Vodafone's internet strategy. In its defence, Mannesmann had repeatedly derided the lack of its rival's internet presence.

The German firm is one of Europe's largest internet service providers, combining mobile and land-line telephony to deliver online services.

Vodafone is only providing mobile phone services, and announced its internet strategy only earlier this month.