Vodafone and its advisers Warburg Dillon Read and Goldman Sachs could not find a single German bank to execute the share exchange needed to effect the hostile E150bn ($153bn) offer for Mannesmann.

"Most of the German banks didn't want to be seen as pioneers,' said Simon Dingemans, who with Simon Mead led the Goldman Sachs team which advised Mannesmann. German banks, such as Commerzbank, refused to handle the exchange for Vodafone for fear of the political backlash. Others such as Deutsche and Dresdner also had banking relationships with Mannesmann or Orange. The reluctance of these banks underlines the huge reputational risk that Warburg and Goldman undertook in agreeing to execute the first foreign hostile bid for a German company. It will go some way towards justifying the $640m in costs that Vodafone will have to pay for its landmark bid. "There are many people in the German corporate world who will be really upset about this,' said Warren Finegold, one of the key Warburg bankers. "Running this risk underlines our conviction that the deal was a good one.' Finally, Vodafone resorted to marshalling Paribas' German retail operations to handle this crucial aspect of the takeover. Warburg and Goldman faced a team led by Morgan Stanley and Merrill Lynch and which included Deutsche Bank and JP Morgan. Goldman's Scott Mead and Morgan Stanley's Dietrich Becker worked closely together while Merrill Lynch's Colin Roy and Warburg's Robert Gillespie were in communication. Mark Lewisohn, Warburg's head of telecoms played a key role alongside Finegold. Christopher Mallaby also played a behind-the-scenes diplomatic role with German political figures. However, all agree that the real battle was won in the equity markets, where legions of international investors needed to be convinced on complex new strategies. Warburg and Goldman are known to have worked well together as joint advisers. Finegold, who led Warburg on the M&A side, joined Warburg from Goldman Sachs in 1998 around the same time that Simon Dingemans left Warburg. "This gave us a significant advantage over the other side,' said Finegold, who maintained there was great division in the Mannesmann camp. Merrill and Morgan Stanley have helped Mannesmann to win a much higher price yet they have lost a large telecoms client. It is likely they will turn their attention to Deutsche Telekom.