Mannesmann Near Deal With Vodafone

Mannesmann of Germany is poised to accept a sweetened takeover bid of $180 billion from Britain’s Vodafone AirTouch, for a deal that would create the world’s No. 1 wireless company through the biggest merger in history.

Mannesmann chief Klaus Esser, speaking Thursday alongside Vodafone Chief Executive Chris Gent in their first joint appearance, said he will recommend that his company’s supervisory board accept the deal at a meeting today.

The breakthrough in the hostile takeover battle came after intense negotiations between Gent and Esser in a meeting that stretched from Wednesday night into Thursday morning.

The new offer would give Mannesmann investors close to an equal stake in the combined company, overcoming a major stumbling block in the negotiations.

Mannesmann had demanded a share of no less than a 50% the new company, but Gent as recently as Wednesday was ruling out such an option, arguing that that Vodafone was much larger than Mannesmann.

“The shareholders clearly think that this company, Mannesmann, a great company, would be better together with Vodafone AirTouch,” Gent told reporters in Duesseldorf.

The companies had been locked in a stalemate since Nov. 14, when Mannesmann’s supervisory board rejected Vodafone’s unsolicited overture.

Before the new proposal was announced, Mannesmann shareholders had been facing a deadline of Monday on whether to accept a Vodafone offer worth about $165 billion.

Under the new proposal, Mannesmann shareholders would get 58.96 Vodafone shares--currently worth about $350--for each of their Mannesmann shares, giving them a combined 49.5% stake in the merged company.

Shares of both companies fell in New York Stock Exchange trading Thursday. Vodafone slipped $1.25 to close at $61.75, and Mannesmann was off $4 at $311.50.

Esser said that his vigorous defense against the hostile takeover had resulted in a deal almost double Vodafone’s original offer.

“This change of 90% is certainly something that came about through this discussion,” he said.

Vodafone shareholders would hold a controlling stake, with 50.5% of the stock, in the new company, which would be the biggest wireless communications concern in the world. It would have 42 million customers in 25 countries, with market-leading operations in Europe and the U.S. In Europe, it would have the No. 1 or No. 2 position in 11 countries, with 29 million customers on the continent.

If the deal is completed, it would be the biggest corporate marriage in history. It would easily eclipse the planned $135-billion merger of America Online and Time Warner, and MCI WorldCom’s $115-billion deal with Sprint Corp.

Mannesmann operates the largest mobile calling business in Germany, and it also owns a major engineering and automotive business.

Vodafone became the world’s biggest mobile phone business about a year ago with its acquisition of AirTouch Communications, a major wireless operator in the Western and Midwestern U.S. Now Vodafone is ready to link up AirTouch with Bell Atlantic’s wireless unit in a joint venture that would create the biggest U.S. wireless service.

The new company’s large coverage area would make it easier for mobile phone users to take their service with them wherever they go.

A combined company also would be likely to play a dominant role in implementing the next generation of wireless technology, which will allow high-speed Internet access from anywhere in the world.

In Brussels, European Union regulators said earlier Thursday that they would have to review any merger between the two companies.

“We have been looking at it since we were first notified, and we will continue to look at it,” said EU Commission spokesman Michael Tscherny, who added that the commission is expected to issue a first-phase decision Feb. 17.

Earlier reports had said that Mannesmann’s Esser would step down. But he said Thursday that he would stay on for five months to help with the transition. The two executives provided few details on the proposed structure of the new company, however. Vodafone had said previously that no jobs would be cut as a result of any merger.