British cellphone giant Voda fone AirTouch issued the world's largest hostile bid yesterday with a fresh €124 billion (£97.7 billion) offer for its European partner, Mannesmann of Germany.
The world's biggest mobile phone group said it was offering €240 per Mannesmann share in an all stock bid, raising an initial €203 per share offer which the German telecoms and engineering group had rejected on Sunday.
Mannesmann shares slid below €200 on disappointment that the bid - at a premium of around 18 per cent to the stock price yesterday - included no cash.
Vodafone chief executive Mr Chris Gent appealed directly to Mannesmann's shareholders after the German group's chief executive Mr Klaus Esser stated that he wanted no further talks.
"This is the only way we can present Mannesmann shareholders with the option of investing in the world's leading, international mobile telecommunications company," Mr Gent said.
In an effort to appease Mannesmann shareholders, Voda fone downplayed the hostility of its move. "We have nothing other than respect for the company . . . so we wish to make it clear to them that our intentions are only in the best interests of shareholders," Mr Gent said.
A successful hostile bid by a foreigner for a German company is unprecedented, and Mr Gent said he expected British Prime Minister Mr Tony Blair and German Chancellor Mr Gerhard Schroder to let shareholders decide the future of the two companies.
But Mr Schroder was quoted by French daily Le Monde as saying hostile takeovers destroyed a company's culture.
Winning Mannesmann will secure Vodafone's position as leader of a deregulating and booming European mobile phone market - one of the world's biggest growth industries. If it loses, it risks being squeezed out of two key markets: Germany and Italy.
The headline price does not include Mannesmann's debt of around €23 billion, and banking sources said Vodafone was seeking to raise a record £23 billion sterling (€36 billion) syndicated loan to help refinance its debt obligations.
Vodafone has presented its bid to Mannesmann's supervisory board, which was meeting yesterday, and which the British group hopes will help it win over the German company's management.
"We live in hope that having given further consideration they will come back and we might be able to make this a recommended offer," Mr Gent said.
The 21 members declined to comment and a Mannesmann spokesman would not shed light on when the company planned to respond to Vodafone's move. Stung into action by the German group's $32 billion (€31.1 billion) bid for its domestic arch-rival Orange, Vodafone could make corporate history in Germany, which has yet to see a successful hostile bid by a foreign company.
The offer - which is expected to be rejected by the German company and set the scene for a high profile and bitter bid battle - came in midway between expectations of €230 to €250 and Mr Gent declared it was "full, fair and final".
Mr Gent told a news conference that the company had had initial discussions about the bid with European Union and British regulators and planned to meet German watchdogs yesterday.
Telecoms analysts believe Vodafone has a reasonable chance of winning over Mannesmann's shareholders.
"The bid's chances of success are finely balanced. My feeling is the odds are marginally in favour of a victory for Vodafone," said ABNAmro analyst Mr Mandeep Singh.
In effort to appease Mannesmann's powerful workforce, which is represented on the group's supervisory board, Vodafone reiterated that it planned no redundancies and that employees would benefit from enhanced growth prospects.
Shares in both groups fell on the news.
