Launching the largest corporate takeover bid ever, Vodafone AirTouch PLC offered today to pay $139 billion for the German telecommunications company Mannesmann AG.

Mannesmann's executive board recommended that shareholders turn down the proposal, as the company itself had rejected an earlier offer. The offer also drew protests from Mannesmann workers and a veiled warning from German Chancellor Gerhard Schroeder.

The bid by Vodafone, a British company that is the world's largest cell-phone operator and has extensive operations in the United States, next will go directly to Mannesmann shareholders. That makes the move, in effect, a hostile bid.

Vodafone's offer, in stock and assumed debt, exceeds the $129 billion that MCI WorldCom Inc. recently agreed to pay in a friendly buyout of Sprint Corp.

Should Vodafone succeed, the combined company would have more than 130,000 employees, annual sales of $31 billion, 42 million cell-phone customers and a stock-market valuation of about $220 billion.

The magnitude and audacity of the Vodafone offer is another sign that European companies have grown enormously in size and sophistication in recent years. Ten years ago, neither Vodafone nor Mannesmann were known to the general public. Their names still are not prominent in the United States, but in today's Europe they are the leaders of the hottest industry, mobile communications.

Few large software or Internet companies have arisen on the continent. And mobile communication is further advanced here than in the United States, in part because all European countries have agreed on one technical standard; in the United States there are several. A French cell phone, for example, can take and make calls whether it is in London, Helsinki or Athens. So billions of dollars in investment capital, American and European, has flowed toward the mobile-telecommunications companies.

"These are the Microsofts of Europe," said Paul Gibbs, head of merger-and-acquisition research for J.P. Morgan Securities in London. "There will be an intense battle."

The struggle may spread across the Atlantic as well. Several American communications companies, including Bell Atlantic Corp. and SBC Communications Inc., have been mentioned as possible competing bidders for Mannesmann, or as the "white knights" to which the company might turn to protect it from Vodafone.

SBC had no comment. Bell Atlantic Chairman Ivan Seidenberg, in a sign of how expensive this battle has become, said Wednesday: "At the valuations being reported, we're not interested."

Vodafone bought AirTouch, the largest cell-phone services operator in the United States, for $58 billion last January. It recently entered into a partnership with Bell Atlantic to offer a mobile phone service across the country.

A combined Vodafone-Mannesmann would have operations in 25 countries and a dominant presence in the telecommunications markets of another 13 nations, Vodafone chief executive Chris Gent told reporters in London.

Analysts cautioned that Europe seems to be heading for the same stock-price inflation in telecommunications stocks that the United States has experienced in Internet stocks. "The sector is momentum- rather than value-driven at the moment. We are going through tremendous changes in the industry," said Douglas Wight, an analyst with Commerzbank in London. As for Vodafone, "They can probably afford it. The question is whether it's in the best interests of their shareholders."

Vodafone wants Mannesmann because it cannot dominate the European mobile market without it. In addition to its D2 network in Germany, Mannesmann has interests in Italy and France. With Internet access by mobile phones just around the corner, companies envision a huge surge in the use of cell phones.

Vodafone and Mannesmann are partners in several European mobile operations, but Vodafone was angered when Mannesmann agreed to buy another large British cell-phone operator, Orange PLC, in October for $33 billion.

Mannesmann will not submit without a struggle. Germany has never had a true hostile corporate takeover and the reaction today was negative and angry. Hundreds of Mannesmann workers at the cell-phone factory in the town of Ratingen stopped work and demonstrated briefly outside the factory.

Schroeder, in an interview in today's Le Monde newspaper, warned against the takeover bid without naming its protagonist. Asked about Vodafone and Mannesmann, he said: "Hostile takeovers destroy the culture of the company . . . those who launch such ventures in Germany underestimate the virtues of our joint [union-management] co-direction. . . . For these reasons I am warning those who want to jump into such an adventure to be careful."

Mannesmann also has structured itself, with the help of German law, to resist takeovers. Gent today said those hurdles can be overcome.

Gent, 50, clearly has taken on the quest for Mannesmann as a personal battle. Gent referred to Klaus Esser, his counterpart at Mannesmann, by his first name several times during the news conference today. And when a cell phone rang somewhere in the room, he said: "It would be very useful if someone answered that phone. It's incoming-call revenue."

Special correspondent Timm Gossing in Berlin contributed to this report.


Vodafone AirTouch and Mannesmann are partners in several European mobile operations. Mannesmann recently agreed to buy Orange, another large British mobile phone operator, but Vodafone says it would spin off that company if it wins Mannesmann.

Vodafone AirTouch PLC

Formed this year when Vodafone Group acquired San Francisco-based AirTouch Communications.

Has more mobile phone subscribers than anyone in the world.

Headquarters: Berkshire, England

Employees: 12,600

1999 revenue*: $5.4 billion

1999 earnings*: $1 billion

Mannesmann AG

Is Germany's top wireless provider.

Telecommunications sales account for about one-quarter of its sales; also sells steel tubes, auto parts and engineering services.

Headquarters: Dusseldorf, Germany

Employees: 116,200

1998 revenue: $19.8 billion

1998 earnings: $654 million

Orange PLC

Mannesmann's pending acquisition of Orange would play a major role in any takeover bid by Vodafone AirTouch.

Orange has 3.1 million mobile phone customers.

Headquarters: Bristol, England

Employees: 6,100

1998 revenue: $2 billion

1998 loss: $163 million

*Fiscal year ended March 1999

SOURCES: Ovum, Hoover's, Associated Press