Vodafone has made history with a world-beating £79bn hostile bid for German group Mannesmannn. The all-paper offer is 20 per cent higher than the bid rejected out of hand by Mannesmann's board earlier this week.
On paper, the deal looks good - the two companies complement each other and shareholders look certain to benefit. But Vodafone has two major obstacles in its path. First up is Mannesmann CEO Klaus Esser, who has made it quite clear he will resist any takeover attempts.
Esser is widely regarded as the man who led Mannesmann into the mobile market and profitability. He believes that given half a chance he can continue to work wonders and therefore accepting Vodafone's offer would be a premature mistake. It is clearly a personal issue for Esser, as demonstrated by this week's court action by Mannesmann against Goldman Sachs.
Clearly an attempt to disrupt Vodafone and show he is not to be trifled with, Esser's case backfired when a judge described the company's conduct as "totally disgraceful and unacceptable". It had been trying to prevent Goldman Sachs from advising Vodafone on the hostile bid.
But even if Vodafone does manage to bypass Esser, there remains the knotty question of how the German market will react. As has been continually reported since the first bid, there has never been a successful hostile takeover in German business history. German newspapers have acknowledged that fact and are turned the showdown into one of national pride ("The Englanders are coming, with a knockout offer...will greed triumph today?," reads one).
However with the situation so heavily publicised, investors are likely to look very closely at the figures. And this may be where Vodafone wins the war. Both sides have a lot to win and a lot to lose. Iit looks like the ultimate experiment in whether belief or money prevails in the modern economy. ®