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Wednesday, 2 February, 2000, 11:56 GMT
Fund managers back Vodafone




Pressure appeared to be growing on Mannesmann to agree a friendly merger with Vodafone after chief executive Chris Gent flew to Germany on Tuesday with a fresh plan to resolve Europe's biggest takeover battle.
Mobile merger battle

Mr Gent is reported to have offered embattled German conglomerate Mannesmann a 49.9% stake in the combined company if it drops its opposition to the merger.

Vodafone's original offer, now worth 90bn ($150bn), would have given Mannesmann 48% of the combined group.

Although Mr Gent was in Dusseldorf, the headquarters of Mannesmann, there were no official plans for him to meet with Klaus Esser, Mannesmann's boss.

But the British telecoms giant was reported to have impressed mutual fund managers, with a number urging the German firm's boss to negotiate a deal.

An agreed deal, even at such a late stage, could leave its shareholders with better terms than losing the battle, while also avoiding disruptions from minority shareholdings.

"If there is an improvement in the offer, then this would be a totally different situation," said Georg Denoke, Mannesmann's spokesman. "But we will only negotiate a deal if it is good for shareholders."

One solution would be to offer Mannesmann shareholders some money back in cash from the sale of Orange, Vodafone's UK rival that would have to be sold off if the bid succeeds.

Shares in Mannesmann have risen 119% since October. On Wednesday they reached a new high of 310 euros, ahead of Vodafone's 300 euro offer.

The deal would create Europe's largest mobile phone company.

Knock-out blow

With less than a week to go before shareholders must decide, Vodafone appeared to have gained the edge in Europe's largest contested takeover after its deal on Sunday with French telecoms company Vivendi.

Mannesmann was hoping would do a deal with them 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.



The Vodafone bid is clearly looking more likely to succeed
Frankfurt dealer
"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 US bank said.

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

"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.

It also emerged on Tuesday that Vodafone has already applied to have its shares listed on the Frankfurt Stock Exchange.

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See also:
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Do mergers ever work?
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Vodafone UK's biggest company
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Profile: Mannesmann - turning pipes into phones
19 Nov 99 |  Business
The rapid rise of Vodafone
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Mannesmann eyes AOL Europe
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Vodafone plans mobile internet service
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Mannesmann to launch bank
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Vodafone ready to raise bid
14 Jan 00 |  Business
Mannesmann faces culture shock
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Mannesmann claims "mislead" shareholders

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