Mannesmann chief executive Klaus Esser said the approval of the telecom merger came after a two-hour meeting of the company's board. Shareholders now have until Feb. 17 to decide whether to hand over their shares to Vodafone.

Shareholders had previously faced a Monday deadline under the hostile offer from Vodafone. But a breakthrough for a friendly alliance came Thursday after Vodafone sweetened its offer.

Vodafone chief executive Chris Gent won the breakthrough after flying to Mannesmann's Duesseldorf headquarters for the second straight day Thursday to pitch the last-ditch offer. The two chief executives had hammered out the basis for the deal during a late-night session Wednesday.

In the end, Mannesmann winds up with 49.5 percent control - as opposed to an original offer of 47.2 percent - of a company poised to be an overwhelming powerhouse in global telecommunications with 42 million customers.

With a market value of about $350 billion, the combined company would be the world's fourth most valuable in terms of market capitalization, behind Microsoft, General Electric and Cisco. It would also control the No. 1 or No. 2 mobile phone market position in 11 European countries.

Despite earlier reports that Esser would step down, the chief executives said Esser will stay on for five months to help with the transition.

Vodafone, however, would have a controlling 50.5 percent stake in the new company, which would be a global powerhouse catering to 42 million customers worldwide.

Telecommunications analysts were excited about the potential of the merged telecommunications giant with operations in 25 countries.

"It's all about ubiquitous coverage," said Harvey Liu, an analyst with CIBC World Markets in New York. "If you're a combined Mannesmann-Vodafone, you've got a leg up controlling networks worldwide."

The value of the record deal is based on Vodafone's closing price Thursday in London trading, where shares were down 4.41 percent to $5.90.

If accepted, the deal would easily eclipse both America Online's planned $135 billion merger with Time Warner and MCI WorldCom's $115 billion deal with Sprint Corp. as the biggest corporate marriage in history.

Vodafone became the world's biggest mobile phone business about a year ago by acquiring AirTouch Communications, a major wireless operator in the western and midwestern United States. Now, Vodafone is set to link up AirTouch with Bell Atlantic's wireless unit in a joint venture that will create the biggest U.S. wireless service.

The new company's large coverage area would make it easier for mobile phone users to take their service with them around the globe.

The combined company also would likely play a dominant role in implementing the next generation of wireless technology, which will allow high-speed Internet access from anywhere in the world.

Mannesmann had demanded no less than a 50 percent share in the new company, but Gent ruled such an option out, saying that Vodafone was much larger than Mannesmann.

Both companies had argued that they each have a better strategy for success in the fast-moving telecommunications industry, where deregulation in Europe is causing a breakneck race to grab bigger market shares. They have each spent millions in media campaigns trying to woo shareholders.

Earlier this week, Vodafone took the upper hand when it announced an alliance with French conglomerate Vivendi SA in Europe on an Internet gateway and for mobile and fixed line telecommunications. Mannesmann had earlier been trying to set up its own deal with Vivendi.

Vodafone has said no jobs will be cut as a result of any merger.

European Union monopoly regulators would have to approve any deal. EU Commission spokesman Michael Tscherny said Thursday in Brussels that the Commission is expected to issue a first-phase decision on the case Feb. 17.