FOCUS-Unclear if Vodafone needs domination agreement
(Writes through with background and share prices)
By Steven Silber
FRANKFURT, Feb 1 (Reuters) - Germany's Takeover Commission said on Tuesday it was unclear if Vodafone needed a so-called domination agreement in its takeover bid for Mannesmann AG, failing to clear up a major dispute between the two sides.
``This legal question is currently open from the view of the offices of the Takeover Commission,' the Commission said in a statement.
Mannesmann has argued that Vodafone would need a domination agreement to give it control over Mannesmann's minority shareholders if it won more than 50 percent but less than 100 percent of the German group in its takeover offer.
Under German takeover rules, a domination agreement would mean a bidder had to protect minority shareholders' rights -- either through guaranteed dividends or a cash buyout.
Mannesmann has said that Vodafone AirTouch Plc (quote from Yahoo! UK & Ireland: VOD.L) would need this level of control over Mannesmann to demerge British rival Orange Plc (quote from Yahoo! UK & Ireland: ORA.L), which Mannesmann bought in a $32 billion friendly takeover announced in October.
Vodafone, which plans to distribute Orange shares to its enlarged shareholder base after a Mannesmann takeover, has maintained that a domination agreement is not necessary.
Both sides have cited legal experts to support their arguments as a scarcity of hostile takeover attempts in Germany has provided little precedence.
The British company's record hostile bid, which runs until 2300 GMT on February 7, is currently valued at around 163 billion euros.
VODAFONE, MANNESMANN SHARES SURGE
Shares in both Vodafone and Mannesmann set fresh record highs on Tuesday amid growing expectations the all-share bid would succeed.
Vodafone surged 6.06 percent to 359 pence while Mannesmann climbed 5.73 percent to 296.30 euros, Frankfurt's second most actively traded issue behind Deutsche Telekom AG as telecoms stock stayed in demand on bourses across Europe.
Deutsche Telekom shares jumped 8.07 percent to 75 euros.
Nearly half a billion Vodafone shares traded in London, the stock's second busiest day ever, compared to last year's record volume above 0.9 billion.
Market experts have said Vodafone and Mannesmann shares could extend gains as some investors anticipate a friendly takeover deal between the two companies.
Such a deal could involve the British predator offering Mannesmann shareholders a greater percentage in a combined group than the 47.2 percent on the table now. Mannesmann has been holding out for a minimum of 52 percent.
A friendly deal could also include a disproportionate demerger of Orange giving Mannesmann shareholders more than 50 percent in Orange after a Mannesmann-Vodafone merger, market experts said. |
