Telefonica's £17.7 billion cash bid for mobile phone group O 2yesterday has sparked hopes of a bidding war for one of the sector's top takeover targets.
The Spanish company said it would pay 200 pence per share for the British-based firm, Europe's highest all-cash bid on record, fuelling speculation it would flush out a counter-offer from former suitors such as Germany's Deutsche Telekom.
"Do I think someone else will come to the table? Absolutely," said Deutsche Bank analyst Gareth Jenkins, adding that Deutsche Telekom could pay more with a cash-and-share bid.
A Frankfurt-based dealer put the chances of a German counter-bid at 50 per cent. Deutsche Telekom, which aborted exploratory talks with Dutch peer KPN about a possible joint O 2bid in August, declined to comment.
However, private bank Sal Oppenheim said it was unlikely that Deutsche Telekom would make a counter bid for the mobile operator, as a combined cash-and-share offer would have to provide a premium of 12 to 15 per cent for it to be considered over Telefonica's cash deal.
KPN, which also saw its own offer for O 2spurned last year, said it had no plans to try again,