SPAIN'S Telefonica agreed a £17.7bn bid for cell phone group O2 yesterday, sparking hopes of a bidding battle for one of the sector's top takeover targets.
Financially-powerful Telefonica, the world's fifth-largest telecoms company by market value, said it would pay 200p a share for the company.
Shares in O2, Europe's sixth-largest mobile phone company, surged more than 25 per cent as the market laid bets on whether Europe's highest all-cash bid on record would flush out a counter-offer from former suitors such as Germany's Deutsche Telekom.
Peter Erskine, chief executive of O2, said the company's board was recommending that shareholders accept Telefonica's offer.
He told the BBC Radio 4 Today programme: "The board is recommending it. Obviously, the shareholders will have to decide whether they do accept it. We would envisage if they do, it would close round about January or February.
"It is very good for shareholder value. It's an all-cash offer. It's £2 a share, which is somewhere in the range of a 25 per cent premium over the past three months."
* Vodafone targeted the expanding mobile phone market in India yesterday by paying £820m for a ten per cent stake in the country's largest operator.
The group picked up a stake in Bharti Tele-Ventures, the fastest growing wireless company in India with 14.1 million customers, or 22 per cent of the market.
Mobile penetration is only six per cent in India, with 63.1 million out of 1.1 billion people using mobiles. Nearly 23 million users in India bought their first mobile phone in the past 12 months.
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