Observers are preparing for a lengthy poker game as France Telecom negotiates the takeover of Mobilcom, the German mobile operator in which it has a minority stake.

The French firm is hoping to buy out Gerhard Schmid, the Mobilcom founder and 49% shareholder, who agreed to step down last month after losing an acrimonious struggle for control.

Speaking to reporters on Thursday, Mr Schmid made it clear that he would not accept shares in France Telecom subsidiary Orange as payment for his stake, hoping instead to force a higher cash offer.

For its part, France Telecom retorted that Mr Schmid's demands would only be attended to after it had dealt with all other small shareholders.

The firm is resisting pressure from Mr Schmid, who argues that the French firm is obliged to make an immediate buy-out offer under takeover law.

Stand-off

The niggling over Mr Schmid's stake indicates that the bad blood between the two sides is far from cleansed.

France Telecom wants to control its German unit

For the past few months, Mr Schmid has been demanding that France Telecom buy him out, after he fell out with the French firm over Mobilcom strategy.

Mr Schmid, one of Germany's most controversial business leaders, made little secret of his dislike of French interference in the firm he founded.

The row between France Telecom and Mr Schmid accelerated after he was accused of improper share dealings via a company owned by his wife.

Shares soar

The stand-off has worked wonders for Mobilcom's once-dismal share price, which jumped by 12% in morning trading in Frankfurt.

Investors had been concerned that Mr Schmid might capitulate quickly after agreeing to step down.

But Mr Schmid said that France Telecom was legally bound to pay around 14.5 euros (�9.3; $14.3) per share, almost double the stock's current market value.