Mannesmann-Vodafone merger overshadows AOL-Warner marriage

BANGALORE: German telecom conglomerate, Mannesmann and Britain's Vodafone Airtouch have agreed to the world's biggest-ever merger, Mannesmann Chairman Klaus Esser said. The merger is worth about $180 billion, towering above the $160 billion America On Line-Time Warner union.

Esser and Vodafone chief executive Chris Gent, who will lead the new firm, made the announcement after a board meeting in Dusseldorf. The board of Mannesmann, is to meet again to formally recommend the deal to shareholders, Esser said.

Vodafone is now offering 350 Euros a share for the German conglomerate. Gent said Vodafone would have 50.5 per cent of the new company and Mannesmann 49.5 per cent. Mannesmann's management board has recommended a fresh, all-share offer of 58.96 Vodafone shares per Mannesmann share. The offer, to be put to investors, gives Mannesmann investors 49.5 per cent of the combined group, rather than the 47.2 percent originally on the table. "We have agreed between us that Vodafone AirTouch will be making a revised proposal to Mannesmann shareholders," Gent said, adding that Mannesman's management board was recommending the bid. But the deal, that ends a three-month battle for dominance of mobile communications in Europe, has yet to be ratified by Mannesmann's supervisory board, which includes top industrialists and employees.

Four members of the supervisory board will be offered seats of the Vodafone Airtouch board as part of the deal. Vodafone, already the world's largest mobile phone company, is set to add to its domain Mannesmann's 18.5 million customers to create a 54 million global empire stretching across 25 countries and five continents. Mannesmann's chief executive Klaus Esser will become deputy chairman of the merged group after a vigorous campaign against Gent, during which he argued that his strategy focusing on Europe and both fixed, mobile and internet businesses would deliver greater shareholder value.