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. Last Updated: 07/27/2016

Vodafone Makes $127Bln Bid




LONDON -- Vodafone AirTouch PLC announced Friday that it plans to launch a pounds 79 billion ($127 billion) hostile offer for Germany's Mannesmann AG, in the biggest corporate takeover bid in history.


Having failed to win over Mannesmann's board with a friendly offer, the British company is approaching the target's shareholders directly.


Vodafone, the world's No. 1 mobile phone business, is offering 53.7 of its own shares for each Mannesmann share, valuing the deal at 240 euros ($250) per share based on Thursday's closing stock price. The offer represents share an 18 percent premium over Vodafone's initial offer of 203 euros per share.


The German engineering and telecommunications group had rebuffed a friendly all-stock offer of $73.8 billion Sunday.


Vodafone chief executive Chris Gent said his company received a letter Thursday from the German group's chairman, Klaus Esser, "making it clear he had no interest in a constructive discussion."


Until then, Vodafone had held out the hope that it could persuade Mannesmann's management to accept a second, sweetened offer. Vodafone had planned to make this offer when Mannesmann's supervisory board met later Friday in D?sseldorf.


But Esser's defiant letter "precluded the logic of making a friendly offer today," Vodafone spokesman Terry Barwick said.


The offer is the largest ever made for a company, eclipsing MCI Worldcom's record $115 billion purchase last month of Sprint, a deal still pending before U.S. regulators.


The combined operation would be the world's leading international mobile phone group, with more than 42 million customers. If the bid is accepted, the German company's shareholders would control 47.2 percent of the combined group.


"We think this is a very good offer. It is our final offer, and we expect to gain support from the Mannesmann shareholders," Gent said.


Vodafone will send details to investors over the weekend, he added.


Both Mannesmann and Vodafone are vying for a dominant role in Europe's mobile industry, a market that some analysts believe will double in value to $100 billion over the next five years.


Mannesmann has a strong presence in Germany and Italy. Vodafone dominates Britain's wireless industry andwants to expand its operations in continental Europe.


The companies are already partners in three countries. However, Mannesmann insists that its strategy of integrating mobile and fixed-line phone services promises faster growth than what it calls Vodafone's "obsolete" reliance on cellular business alone.


Under the proposed deal, Vodafone would win control of Orange, the British mobile phone operator that Mannesmann bought last month for pounds 22 billion ($35.4 billion).


Gent said that Vodafone would spin off Orange as a separate company, with the benefits going to shareholders in the combined group. British law bars a company from operating more than one wireless business.


Mannesmann, for its part, has ruled out seeking support by allying itself with another company."We do not seek another company's help, a so-called white knight, because we have the better prospects and the better strategy," Mannesmann spokesman Manfred S?hnlein said Thursday.


Mannesmann suffered a setback to its defense efforts Thursday when a High Court judge in London upheld U.S. investment bank Goldman Sachs' authority to advise Vodafone in its pursuit of Mannesmann.


Judge Sir Gavin Lightman dismissed Mannesmann's allegations that the investment bank had a conflict of interest.


Mannesmann had argued that Goldman Sachs obtained confidential information that could help Vodafone make a hostile bid.