Mannesmann accepts Vodafone's improved offer

Vodafone Airtouch finally sealed its hard fought merger with German mobile operator Mannesmann late on Thursday.

The UK based operator secured the deal after sweetening its offer to $176 billion (180 billion euros). Mannesmann shareholders will now get a 49.5 per cent share in the combined company, up from the 47.2 per cent originally offered.

Vodafone originally mounted a hostile takeover bid for the German company last November targeting it as a key plank in its global expansion strategy. But Mannesmann resisted, arguing that the original offer was not enough as it would provide more than half of the new growth from the combined businesses.

Chris Gent, Vodafone Airtouch's chief executive, said: "We are delighted that the management board has agreed our revised offer to Mannesmann shareholders. We are confident that the combination of our two multimedia communications companies will enable us to create one of the world's leading mobile multimedia communications companies."

Mannesmann officials said in a statement: "On the basis of the agreement, the Mannesmann group can look forward to continued commercial success while its management and employees can expect further prospect for successful development."

The German operator has also secured other key issues as part of the deal, including its continued participation in the Arcor and Infostrada wireline businesses and the flotation of its engineering and automotive units in the middle of the year.

The fate of Orange, Vodafone's UK rival, which Mannesmann acquired in October for £19.8 billion, was not immediately clear.

Mannesmann will have five representatives out of a total of 19 on the new Vodafone Airtouch board. Klaus Esser, its chief executive, will also join the board, but will resume a non executive role once Mannesmann sells off its industrial businesses.

Mannesmann is a majority shareholder in two of Europe's top three European mobile operators, Omnitel in Italy, and Mannesman D2 in Germany. They have a combined subscriber base of eight million.

It likewise holds a 15 per cent stake in SFR, the French mobile operator and has recently gained a fourth mobile license for Austria.

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