LONDON (CNNfn) - Vodafone AirTouch boosted its chances of acquiring Mannesmann by snapping up France's Vivendi as a joint venture partner. The accord sparked a sharp rise in the German firm's share price as investors judged that Vodafone's hostile 158 billion euro ($155 billion) bid was increasingly likely to succeed.|
The deal coincided with a report that Vodafone (VOD) and Mannesmann (FMMN) have restarted talks, which could lead to an agreed deal. The companies have been sparring since U.K. firm first announced it would make a hostile offer last September.
Vodafone and Vivendi (PEX), a diversified utility with wide telecom interests, agreed Sunday to establish a European Web portal operation to be owned on a 50:50 basis.
Mannesmann and Vivendi last week broke off talks which were seen as an attempt by the German company to enlist Paris-based Vivendi as become a white knight to help fend off the hostile bid from Vodafone.
Mannesmann shares climbed 4.33 euros to 272.53 euros Monday, after earlier climbing as high as 279 euros, reflecting increasing speculation that Vodafone's offer, currently worth 304.75 euros per Mannesmann share, would win majority support from the German company's shareholders.
Vodafone dipped almost 1 percent to 340 pence in London. Vivendi shares were almost 3 percent higher in Paris having reached 106 euros earlier in the session.
A report in the Wall Street Journal said Vodafone and Mannesmann met at the weekend, moving closer to agreement in disputed areas such the as the percentage of acceptances from Mannesmann shareholders which would give the U.K. firm control of its takeover target. This has been uncertain because of the lack of hostile takeovers in Germany. Shareholders have until Feb. 8 to accept the Vodafone offer, with analysts still suggesting that the outcome is too close to call.
Separately, Vodafone and Vivendi agreed a memorandum of understanding to establish their Internet portal, provided that the U.K. company succeeds in its takeover bid for Mannesmann.
Vodafone announced plans earlier this month to establish a global Internet platform. The new joint venture would also team up with Japan's Softbank to launch a fund aimed at the new range of cellular-based Internet products.
Mannesmann chief executive Klaus Esser had based his defense on plans to expand the company's existing fixed-line and cellular operations, and said it would consider spinning off its online businesses in a separate company to maximize their growth potential. Esser announced plans Friday to team up with Deutsche Bank, Germany's largest bank, to establish a pan-European Internet banking venture.
Mannesmann has transformed itself over the last few years from an engineering firm into one of the largest telecom companies in continental Europe.
The Journal report said that the U.K. and German firms remain far apart on the issues of price and the percentage of the merged company that would end up in the hands of Mannesmann shareholders. Vodafone chief executive Chris Gent is standing by the 49 percent share implied by his company's latest offer.
Vivendi's principal telecom asset is its controlling stake in Cégétel, France's second-largest telecom company. The deal with Vodafone would see half of Mannesmann's 15 percent stake in Cégétel sold to Vivendi.
Vivendi also said that it would not acquire Orange, the third-ranked U.K. cellular network, which Mannesmann bought last year. Competition authorities would require Vodafone, which owns the largest U.K. cellular operation, to sell Orange if it takes control of Mannesmann.