LONDON (CNNfn) - The European Union granted conditional clearance Tuesday to German mobile firm Mannesmann to acquire British wireless operator Orange.|
In a widely expected move, the EU's competition commission approved the acquisition with the sole proviso that Mannesmann, Germany's largest mobile phone company, shed its stake in mobile operator Connect Austria.
The green light comes as Mannesmann is fighting to fend off a $128 billion hostile takeover bid from Britain's Vodafone AirTouch, one of Orange's fiercest competitors. Mannesmann's planned purchase of Orange is seen by many analysts as the catalyst behind Vodafone's decision to press its bid despite vociferous protests from Mannesmann chief executive Klaus Esser.
Vodafone is expected formally to launch its offer, the biggest hostile assault ever, on Friday. The company will file the bid under German takeover rules, meaning that it would have the option to extend the offer for 14 days beyond its initial Feb. 7 closing date.
Esser maintains that Vodafone’s all-stock offer, which currently values Mannesmann shares at a little more than 260 euros each, significantly undervalues his company, which has enjoyed meteoric growth over the past several years. He is known to prefer a go-it-alone strategy rather than a combination that he fears might stifle growth.
But Vodafone boss Chris Gent reportedly believes the time is ripe for Mannesmann shareholders to weigh in on the bid, making an extension beyond the Feb. 7 deadline unnecessary.
Ironically, a combined Vodafone-Mannesmann entity would be forced to shed Orange to placate competition authorities.
Mannesmann (FMMW) shares dipped half a percent in Frankfurt Tuesday, while in London Orange (ORA) dropped a similar amount and Vodafone (VOD) shares were unchanged at 301 pence.