Mannesmann and Voda fone AirTouch last night agreed the world's biggest merger in a deal worth about $185 billion (€187 billion). Mannesmann chairman Mr Klaus Esser and Vodafone chief executive Mr Chris Gent, who will lead the new firm, made the announcement after a seven-hour Mannesmann board meeting. Vodafone is now offering €350 (£276) a share for the German conglomerate. Mr Gent said Vodafone would have 50.5 per cent of the new company and Mannesmann 49.5 per cent.
Under the terms of the offer, Mannesmann shareholders will receive 58.96 shares in the new company for each Mannesmann share they own. This compares with the final hostile offer from Vodafone of 53.7 new shares, which would have left Mannesmann shareholders with a 47.2 per cent holding in the new company.
The agreement puts an end to Vodafone's hostile bid for Mannesmann which was to expire on Monday.
Mr Gent will lead the new group, which will have joint headquarters in Newbury, England and Dusseldorf. Mr Esser will remain as the Mannesmann chief for five months and then become a non-executive vice-resident.
Vodafone is already the world mobile telephone leader. But it will now gain huge access into the European market and the deal will further clear the way for rapid Internet expansion.
Vodafone's victory marks the first time a foreign company has succeeded with a hostile assault on a large German company and tells executives globally there are no longer any no-go areas as European business embarks on a widescale restructuring.
One investment banking adviser to Vodafone said: "Germany's hitherto unbreachable corporate world has finally been broken and many are going to be licking their lips."
At $375 billion, the merged group will be Europe's largest publicly-traded company and the world's largest telecoms group. It will also rank as the fourth largest company in any industry, behind Microsoft, General Electric and Cisco Systems.
As the undisputed champion of the European telecommunications industry, it will also stand at the centre of the continent's wireless Internet revolution. With personal computer use much lower than in the US, the mobile phone is now seen as the key method by which Europeans will come to access the Internet.
Mr Gent finally convinced Mannesmann after sealing a deal with Vivendi of France last Sunday to set up Europe-wide Internet access for personal computers, televisions and telephones.
This deal creates a dominant force in the global wireless communication business with about 10 per cent of the current global market.
Formed only in 1985, Vodafone's growth by acquisition has raised the ante for competitors and helped accelerate the pace of corporate change.
Mannesmann last October triggered Vodafone's hostile takeover bid by taking over another British telecoms group, Orange, which the new company will now almost certainly have to sell in line with British competition regulations.
Over the course of the threemonth battle it became clear that just enough investors on both sides of the Atlantic wanted to see the takeover happen.
Institutional shareholders were won over by the logic of the deal, creating a telecoms giant with global reach which could be at the forefront of the coming convergence of the Internet and mobile communications.
