German steelmaker launches takeover bid for larger rival
Mar. 18, 1997
FRANKFURT, Germany (AP) _ In a deal that would create the world's third largest steel producer, Fried. Krupp AG Hoesch-Krupp said Tuesday it plans to buy its larger competitor, Thyssen AG, for $8.1 billion.
But Thyssen vowed to fight the hostile offer, saying the combination would cost tens of thousands of jobs.
Krupp said it will offer 435 marks, or about $259, for each of Thyssen's shares, a 25 percent premium over their latest price. Trading in both companies was suspended Tuesday on the German stock exchange.
Thyssen, currently 12th in world steel production, said it would need help from another company to fight off Krupp, which is ranked 17th by the International Institute for Iron and Steel in Brussels, Belgium.
Only Japan's Nippon Steel and South Korea's Pohang Iron and Steel produced more steel than the combined 17.9 million metric tons made by Thyssen and Krupp in 1995, according to the institute's latest figures.
The hostile offer is consistent with the past activities of Krupp chairman Gerhard Cromme, who masterminded Fried. Krupp AG's controversial takeover of Hoesch AG in December 1992.
Thyssen, which has trimmed its work force by 9.3 percent over the past five months, said the Krupp offer threatens tens of thousands of its 111,000 remaining workers.
It called the move ``wild west behavior,'' adding that Krupp group was ``seeking to solve its own considerable problems by seizing the reserves of Thyssen.''
Cromme, addressing to about 1,000 noisy demonstrators at Krupp headquarters in Essen, said Tuesday that reports of 30,000 job losses in the takeover were ``pure panic-making.''
Hostile takeovers are rare in Germany. Economics ministry spokeswoman Regina Wierig said the takeover would need approval of European Union antitrust authorities in Brussels.
Georg Bongen, head of the workers council within Thyssen, said Krupp would sell off Thyssen's 30.1 percent stake in the E-Plus mobile phone service and some 40,000 family homes to finance the acquisition.
German steel operations have been struggling for years to stay afloat in the European steel sector, which has suffered from overcapacity.
For the fiscal year ending Sept. 30, 1996, Duesseldorf-based Thyssen reported profits of 350 million marks on sales of 38.7 billion marks. Krupp, which has 66,000 employees, posted profits of 208 million marks on sales of 24 billion marks in the year ended Dec. 31, 1996.
Krupp began as a steelmaker in 1811, but its expansion into arms production turned it into one of Europe's greatest industrial powers by the turn of the century.
Krupp used forced labor during World War II, and then-chairman Alfried Krupp von Bohlen und Halbach was convicted of war crimes in 1948 and spent three years in prison.
Today, Krupp is a diversified company that is also engaged in engineering, shipbuilding and trading.