German industrial giant Krupp is believed to be preparing a hostile takeover bid for rival Thyssen that would create a steel and engineering titan with annual sales of more than 63 billion marks.
In a combative statement on Monday, Thyssen AG said Fried. Krupp AG Hoesch-Krupp planned a hostile take-over of the company and vowed to use all appropriate measures to ward off any grab for control by its rival from
Coming just days after miners protests brought daily business in Bonn to a standstill, fears that a mammoth merger in Germanys Ruhr Valley industrial heartland could cost thousands workers their jobs could spark similar protests from Thyssens work force.
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This is an incomprehensible act, Thyssen said in a statement, adding that in light of the countrys worst jobs crisis since World War Two such Wild West behaviour is particularly unacceptable.
We are unconcerned about this, a Thyssen spokesman told Reuters. This can only be an attempt on the part of Krupp to resolve its own problems by tapping into Thyssens reserves. Thyssen called a news conference for Tuesday afternoon.
It made the statement after an advance report from the daily Frankfurter Allgemeine Zeitung on Tuesday said Krupp was preparing to make a bid to Thyssen shareholders.
The bid was being prepared by Deutsche Morgan Grenfell, the investment arm of Deutsche Bank AG, the report said. Neither Krupp nor DMG would comment on the report.
We will not comment on these rumours now, said Krupp spokesman Juergen Claassen. We will issue a press release shortly.
Hostile take-overs are almost unheard of in Germanys neat corporate environment where equity swaps are managed by the nations banks, who sit on the boards of most blue-chips, and surprise bids for management control have a bad name.
But it would mark the second time in six years that Krupp has ventured into these unpopular waters to buy out a rival in what many analysts believe is a sorely-needed consolidation of the German steel industry in the face of chronic over-capacity.
Just before Europe fell into its worst steel slump since in decades, Krupp snatched rival Hoesch AG in 1991 in a surprise move that combined Germanys second and third largest steel makers, but still left Thyssen the number one in the sector.
Hoesch also had vowed to fight to the bitter end. But the battle was lost even before it began when Krupp chairman Gerhard Cromme revealed he already had control of the firms capital.
Thyssen shares have been unimpressive lately until February 24 when DMG gave them a boost with by upgrading its recommendation to overweight from hold. The shares closed trade on Monday at 346.80 marks, down 7.20 from Friday.
If Krupps take-over of Hoesch is an example, thousands of job cuts would likely follow a merger with Thyssen.
Although Krupp and Thyssen co-operate in the production of some types of steel, there is still a lot of overlap in their steel activities and in basic engineering products.
Crommes massive restructuring of Hoesch and Krupps steel businesses indicates that he would seek to take advantage of all synergies after taking over Thyssen.
It is unclear how Thyssen shareholders would react to a take-over bid. While Cromme has gained the respect of investors for his successful merger of Krupp and Hoesch, Thyssen chairman Dieter Vogel is under pressure because of what increasingly looks like a failed bid to enter the telecommunications business.