Mannesmann, the besieged German telecommunications and engineering group, is set to mount a robust defence against Vodafone AirTouch's hostile 124 billion euro (about HK$991.59 billion) bid following strong backing from its top-ranking supervisory board. The endorsement gives Mannesmann's chief executive Klaus Esser the green light to 'pull out all the stops' in its resistance to the Vodafone bid, sources close to the company said. These are likely to include a much faster than envisioned demerger of its tube-manufacturing and automotive businesses and could even involve the introduction of a potential 'white knight', although this is seen as a last resort. The moves are aimed at persuading Mannesmann shareholders, which include Hutchison Whampoa, the largest with a 10.2 per cent stake, to stay loyal to the company and reject the Vodafone bid. Plans are already under way to speed up the demerger of Mannesmann's engineering businesses, which would significantly bolster its balance sheet. The sale of the non-telecoms units could fetch eight billion euros and also strengthen Mannesmann's desire to be seen as a pure telecoms play likely to produce better returns independently than as part of the Vodafone empire. Mannesmann's recent bid to buy Orange, the British mobile phone group first launched by Hutchison Whampoa, has shown that it is intent on being a leading player in the European telecoms industry, sources said. But that deal has also caused problems for Mannesmann as many large shareholders have been concerned at the GBP19.8 billion (about HK$249.4 billion) the company is paying. And most analysts agree it is a highly priced deal. Amid such shareholder discontent, the emergence of a 'white knight' may prove to be the only way out. As it is anxious to maintain its independence, Mannesmann is looking more for a partner that will be a strong ally for the group, providing a symbiotic relationship, rather than becoming a potential acquirer. Earlier this year the French conglomerate Vivendi was courting Mannesmann as a potential partner. Mannesmann's moves over the next few weeks are seen as crucial to the future of the company. Vodafone said its formal offer document for Mannesmann would be posted to investors in the first or second week of next month, starting the clock ticking for shareholders to accept or reject the offer. Under the German takeover code, shareholders will have a minimum of 28 days to make their decision, and a maximum of 60.
