Orange accepts Mannesmann takeover offer

Britain's number three mobile operator Orange is set to fall to German mobile and engineering giant Mannesmann after accepting a GBP19.8 billion takeover bid.

The two companies believe they can create a "leading pan-European operator" bringing together Orange's strengths in the UK market with Mannesmann's strong positions in Germany and Italy.

Orange chief executive Hans Snook said the deal would open "wider opportunities for Orange" and would "accelerate the introduction of new services and greater value for customers."

Mannesmann has struck an irrevocable deal with Orange's largest shareholder, Hong Kong shipping and communications conglomerate Hutchison Whampoa, which holds 44.8 per cent of the stock. Orange management is also recommending the offer.

The tie-up comes as the global mobile sector embarks on a furious round of consolidation. UK number one Vodafone merged with American oeprator Airtouch in January, while One 2 One, the fourth player, was acquired by Deutsche Telekom in August.

Both Orange and Mannesmann were considered vulnerable to takeover - in Mannesmann's case by Vodafone Airtouch in the absence of wider partnerships.

Orange has 17 per cent of the UK market with approximately 3.5 million subscribers. Mannesmann, which is in the process of demerging its wider engineering interests, holds a number one position in Germany and number two in Italy with majority owned local operations.

The offer price comes out at GBP16.29 an Orange share, a premium of 21.6 per cent on Monday's closing price, the day before news of the Mannesmann-Orange talks was confirmed. Company shares raced ahead rising from GBP13.82 to GBP14.68 by mid morning.