LONDON (CNNfn) - Mannesmann, seen as increasingly likely to succumb to Vodafone AirTouch's $161 billion hostile takeover bid, has begun weighing a friendly merger, and may soften its insistence that it won't accept any deal that fails to give its shareholders a marked majority of any enlarged company, according to a published report.|
The New York Times said that according to executives close to the talks, Mannesmann is looking for a face-saving option following Vodafone's successful wooing of France's Vivendi. Mannesmann had earlier tried, and failed, to form its own alliance with Vivendi - a longstanding European partner - to beef up its defenses against the British telecom juggernaut.
A Mannesmann spokesman dismissed the report Tuesday as "nothing but speculation and rumors". He declined to confirm several earlier reports that Mannesmann chief Klaus Esser had spoken with his Vodafone counterpart Chris Gent on the weekend or that any other contact between the companies had taken place, even on an advisory level.
"What we are doing is pursuing our strategy," including possible alliances with other partners, the spokesman said.
The New York Times said Mannesmann is softening its staunch opposition to a takeover by Vodafone. Mannesmann chief Klaus Esser has argued all along that the U.K. company's proposal would dilute the company's potential for strong growth.
Gains in both companies' shares Tuesday indicated increasing numbers of investors expect Vodafone to prevail. Mannesmann (FMMN) stock rose 4.4 percent to about 292 euros, coming closer than ever before to the value of Vodafone's bid, now worth 321 euros a share. Since Mannesmann's shares could be expected to fall if the German company remains independent, a rising price indicates that markets view it as less likely that it will fend off the bid. Shares of Vodafone were up 6.5 percent at 360.5 pence in London.
Press reports Tuesday said Vodafone chief executive Chris Gent had indicated to investment analysts that he would be willing to offer up to 50 percent of the combined equity in a merged company to Mannesmann shareholders. Mannesmann, meanwhile, was reported to have backed away from its original insistence on accepting nothing less than 58.5 percent of the combined entity.
Talks between Mannesmann and Vodafone executives have been going on for a number of days, but are now expected to intensify, the executives told the New York Times. The report said, however, that Mannesmann may not be willing to accept a stake as low as Vodafone's current upper limit.
The paper said Mannesmann was stunned at Vodafone's alliance with Vivendi, a historical ally with which it has a partnership in SFR, France's second-largest wireless-phone company. People close to the talks told the newspaper Esser had endured a stormy meeting with members of his supervisory board after the alliance was unveiled.
Those same board members, the newspaper reported, are now bringing pressure to bear on Esser to strike a friendly agreement with Vodafone. Those said to favor an agreement are Henning Schulte-Noelle, chief executive of Allianz, Germany's largest insurer, and his counterpart at carmaker DaimlerChrysler, Juergen Schrempp.
The newspaper said Mannesmann shareholders may hold out until Feb. 21 - the deadline under German takeover rules - to make their decision on the Vodafone offer.
(Note: An earlier version of this story incorrectly reported that people close to the talks told the New York Times that Mannesmann chief Klaus Esser stormed out of a meeting with members of his supervisory board. The newspaper said Esser endured a stormy meeting.)