Takeover bid for £7bn mmO2

MOBILE phones group mmO2 is believed to have rejected a takeover offer from Dutch telecoms group KPN. Tonight KPN said it had made a bid proposal to mmO2 - one of the hottest takeover targets in the industry - but that talks had ended.

'We were in discussions with mmO2 and these discussions were recent,' said a KPN spokesman. 'I can confirm we made a proposal to mmO2.' He declined to say whether the offer had been for all or part of the British group or divulge further details.

But sources said negotiations, which ended on Friday, had centred on a full takeover of mmO2, the sixth-largest European mobile phone company which has a market value of around £7bn.

MmO2 confirmed it had received and considered a proposal and that discussions had now ceased. It declined to comment further.

News of the latest bid talks between mmO2 and KPN, which have had on-off merger talks for years, comes hot on the heels of Tuesday's takeover of US mobile group AT&T Wireless by larger rival Cingular, which outbid UK mobiles giant Vodafone.

KPN has been interested in particular in mmO2's German business O2 Germany, which would boost its own German unit E-Plus and create a stronger third-ranked rival to market leaders Deutsche Telekom and Vodafone in Europe's largest telecoms market.

While mmO2's Chief Executive Peter Erskine has repeatedly said he is open-minded about a deal, both sides have struggled to agree a price.