Vodafone, the mobile phone operator that did not even exist 15 years ago, has overtaken BP Amoco to become the UK's largest company by market capitalisation.

The news came as Vodafone's audacious £79bn ($160bn) bid to take over Germany's Mannesmann approaches its climax.

Vodafone's shares surged on the London stock market on Monday, as investors became convinced that the company was likely to win Europe's biggest contested merger battle.

They rose 6.7% to 351p, valuing Vodafone at £109.1bn. That put the company just ahead of oil giant BP Amoco, which was valued on Monday at £107.2bn.

Vodafone's share rise began on Friday after Mannesmann published its defence document, opposing the takeover bid.

Mannesmann chairman Klaus Esser told investors to throw the Vodafone bid "in the bin" and said that the company planned to float its internet arm to show how valuable it was.

But investors were disappointed by the nature of Mannesmann's defence.

"No more rabbits"

West LB Panmure analyst John Tysoe said that the catalyst for the rise was that investors now believed Mr Esser had no more rabbits to pull out of hats in defence of his company and that the bid was likely to go through.

"There was a sneaking suspicion on the part of investors that he might just be able to play some sort of 'get out of jail free card' but it now doesn't look like he's got one," he said.

The rise in Vodafone's share price has raised the value of its bid to above 300 euros per share, nearly as much as Mannesmann management says the company is worth.

If Vodafone succeeds in its bid, the combined group could be worth around £200bn - or nearly 17% of the value of the whole of London's top 100 companies.

It would also keep Vodafone ahead of Glaxo SmithKline, which will be worth around £114bn if their merger goes through.

Talks with Vivendi

Meanwhile, Mannesmann continued to try to strengthen its defences by entering into talks with France's Vivendi about acquiring a majority stake in Cegetel, France's second-largest mobile phone operator.

That would give Mannesmann control of the number one or number two mobile phone company in Europe's four biggest markets - France, Germany, Italy and the UK.

In return, Vivendi might take a friendly stake in Mannesmann, giving it a "white knight" to help protect it from the takeover.

On Friday, Mr Esser said the company was not looking for a white knight - but he also said that the company was looking for partners in Europe and America.

World's largest mobile phone company

Vodafone is so valuable because it is the world's largest mobile phone company, with substantial interests in 19 countries and 28m customers, including 10m in the UK.

The mobile phone market is growing rapidly, with four in ten Britons now owning one.

The availability of internet services such as e-mail and video on demand on the next generation of mobile phones is expected to spur demand even more.

Last year, in a series of major deals with Airtouch and Bell Atlantic, it became a major player in the fragmented US mobile phone market.

The company was founded in 1985 by Racal, the electronics company that received the license to build the UK's second mobile phone network, and floated off as a separate company on the stock market in 1988.