LONDON (CNNfn) - Germany's Mannesmann announced Tuesday that it would speed up plans to split its telecom and engineering arms in an effort to fight off the hostile $128 billion bid from Vodafone AirTouch.
Mannesmann plans to sell more than 50 percent of its engineering and auto unit in an initial public offering by mid-2000, about six months earlier than planned. The sale is expected to bring in some $5.15 billion.
The announcement was made along with the company's nine-month earnings which revealed a 3 percent rise in pretax operating profits to 1.11 billion euros ($1.14 billion) in the nine months ended in September. Sales climbed 16 percent to 16.1 billion euros. Both figures were in line with expectations.
While Mannesmann's auto and engineering arms still account for 60 percent of sales, the telecom business generated 95 percent of group earnings. The telecom earnings jumped 46 percent to 1.06 billion euros in the nine-month period.
The accelerated spin-off plan is designed to unlock value in the company whose share price has been held back by the lower premium afforded to its non-telecom units.
The move comes as shareholders are set to square off in the wake of Vodafone's improved all-share bid for Mannesmann currently worth 119 billion euros ($122 billion), or 229 euros per share.
The offer - the largest in corporate history - is developing increased political momentum after German finance minister Hans Eichel called Monday for new European takeover rules to regulate hostile bids in the region.
German chancellor Gergard Schroeder has already weighed in against the Vodafone bid, with Eichel's call centering on a requirement for bidders to offer shareholders a cash alternative to all-stock offers.
While the bid has prompted political debate and protests by German workers, more than 60 percent of Mannesmann's stock is held by non-German shareholders.
Vodafone maintains that it is closing in on the 50 percent acceptance level required to secure control of its German target, but more opponents have emerged this week.
Hong Kong conglomerate Hutchison Whampoa said Tuesday it would back Mannesmann in its defense strategy. Hutchison is selling its 44.8 percent stake in British cellular operator Orange in return for a 10.1 percent stake in Mannesmann, which would make it the largest single shareholder.
Mannesmann said it had secured 74.86 percent of Orange shares after launching a $32 billion friendly bid for the company last month.
U.S. union group AFL-CIO is also reported to be urging managers of its affiliates' pension funds - who control 13 percent of Mannesmann stock -- to back the defense.
Mannesmann shares fell 2.8 percent to 180.90 euros in morning trade Tuesday. Vodafone stock lost 2.5 percent.
-- from staff and wire reports