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. Last Updated: 07/27/2016

Let Shareholders Decide, Mannesmann Boss Says




FRANKFURT, Germany -- As he tries to fend off the biggest hostile takeover attempt in history, the chief executive of Mannesmann AG insisted Sunday that he was not looking for a rescue by a "white knight" investor or by German political leaders.


"This is a matter that should be left to the markets and to shareholders," the executive, Klaus Esser, said in an interview Sunday. "There should be freedom to make offers. If the offer is not attractive, the shareholder can decide."


That may or may not turn out to be the final result. On Friday, after weeks of shadowboxing, Vodafone Airtouch PLC of Britain appealed directly to Mannesmann shareholders with an offer to buy their stock for $127.7 billion, to be paid in newly issued Vodafone shares.


More than money is at stake. German political leaders and labor unions have already expressed outrage at what they describe as a crass, "Anglo-Saxon" bid to break a major German success story.


Mannesmann, originally a giant in engineering and automotive parts, has made itself into a powerful telephone and wireless telecommunications company. Vodafone said it would spin off the automotive and engineering operations - as Mannesmann itself plans to do.


But Vodafone would also split off the fixed-line telephone operations into a company with separate stock, while primarily concentrating on the wireless communications business.


Mannesmann, by contrast, argues that its strategy is based on integrating the fixed-line and wireless businesses.


Vodafone's $60 billion acquisition of Airtouch Communications of San Francisco in January gave Vodafone a 35 percent stake in Mannesmann's German mobile-telephone company, D2, as well as a 22 percent stake in Omnitel, the Italian wireless company in which Mannesmann owns a controlling stake.


Esser said he had wanted at least a "substantial minority stake" in Vodafone's British mobile-phone business and had proposed expanding their cooperation in other countries.


"They didn't want a broadening of cooperation on a parity level. They didn't see us as a partner, but as a target," he said Sunday.


Vodafone's chief executive, Christopher Gent, has told a very different story.


At news conferences, Gent has said that Vodafone was eager to deepen its partnership with Mannesmann but was forced to turn hostile when Mannesmann reached a deal last month to acquire one of Vodafone's biggest rivals in Britain, Orange PLC.


In many ways, the takeover fight marks a key test of Germany's openness. German companies have made huge foreign acquisitions in the last year, led by the Daimler-Benz acquisition of Chrysler Corp. and Deutsche Bank's purchase of Bankers Trust.


But German businesses have remained surprisingly resistant to foreign acquisition, whether friendly or hostile. If Mannesmann repels Vodafone with help from political leaders or from other members of Germany's old industrial club, other European countries are likely to respond with new barriers against German companies.


Esser is in a particularly delicate position, with Mannesmann's deal still pending to buy Orange, Britain's third-largest wireless carrier, for about $33 billion.


And last summer, Mannesmann scored a big victory by lining up in Italy behind Olivetti SpA's hostile takeover of Telecom Italia. When Olivetti won control of Telecom Italia, it sold Mannesmann a controlling stake in the Omnitel wireless network for about $8 billion.