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Mannesmann rejects Vodafone's £64bn bid

Offer cools relationship, hostile bid expected as a result

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Mannesmann has strongly rejected a £64 billion takeover bid from Vodafone, delivered in person by the company's chief executive. The German giant described the bid as "wholly inadequate" and "extremely unattractive", paving the way for a hostile bid, expected shortly. Vodafone is keen to get its hands on Mannesmann, which is in the process of acquiring Orange for £20 billion. Aside from the German firm's unwanted intrusion into the UK market, Vodafone wants its German, French and Italian franchises to strengthen its own position across Europe. However, with the "unsolicited" proposal rejected out of hand, Vodafone has little choice but to go for a hostile bid – something not made easier by the stolid German market which has never seen a successful hostile takeover. Despite a number of others big companies, including BT, Bell Atlantic and SBC, reportedly offering Mannesmann a safe exit through friendly mergers, it seems determined to stay the course. Whether the ballsy approach – which has included strong words, personal pledges and an arrogant self-valuation at double current share price – pays off, only time will tell. Vodafone's chances of success are slipping – made clear by a big drop in its share price. Even if it did manage to buy Mannesmann, it would have to sell Orange, and almost certainly at a loss. With the mobile market set to explode in the next few years, if Mannesmann can keep hold of its independence the opportunity to acquire it may never happen again. ®

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