The fallout from Vodaphone's hostile bid for Mannesmann is spreading rapidly, with the German telecomms giant accusing its bankers, Goldman Sachs, of misuse of confidential information. Goldman is in the interesting position of advising Vodaphone on the bid for Mannesmann, which, if it proceeds, will be the largest hostile bid in corporate history.
Mannesmann claimed in the High Court in London that the bank had access to confidential information when it advised Hutchison Whampoa on its decision to sell to Mannesmann a 45 per cent holding in the mobile operator Orange, acquired in October. Additionally, Mannesmann has used Goldman Sachs for advice in the past. The upshot, said Mannesmann, is that Goldman is unfit to act as an adviser to Vodaphone since its has detailed information on the finances of both Orange and Mannesman.
Goldman Sachs denied yesterday's allegations saying that it pushed for an early hearing to clear its name. There will be a second High Court hearing on Thursday and Goldman has withdrawn .
The fallout illustrates a dilemma shared by many banks and telecomms companies. Both industries are characterised by mergers and acquisitions on a global basis. Institutions are often juggling the businesses of competitors and predators, and there is huge potential for damaging conflicts of interest.
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