Krupp calls truce in steel merger battle with Thyssen

Germany's warring steel giants buried the hatchet last night and appeared to be on the verge of a merger on peaceful terms. If they succeed, the deal will create Europe's third-largest steel and engineering conglomerate.

After week-long talks mediated by business leaders and politicians, Krupp- Hoesch announced the withdrawal of its hostile takeover bid for Thyssen. Instead, both companies pledged to "explore possibilities for co-operation".

A merger between Krupp and Thyssen would create a formidable rival to British Steel, with combined annual sales of DM63bn. Krupp has said a full merger of the two companies would create cost savings in other areas as well, such as engineering and automotive components.

In a joint statement issued last night, the two rivals said their talks had gone well, and there was agreement that they had to find a solution ensuring the survival of the German steel industry. Further discussions were necessary to hammer out the details, particularly the crucial question of what role Krupp would have in the future alliance.

There was no word, either, on what this would mean to the 190,000 people currently employed by the two firms, but unions have warned that tens of thousands are in danger of being rationalised out of their jobs.

Thyssen's works council has called on some 50,000 workers to stage a protest today in Frankfurt's banking district as top politicians, including Chancellor Helmut Kohl, called on both companies to show social responsibility.

"We are going to Frankfurt because we fear that our future cannot be helped by the democratically elected government in Bonn but will instead be decided by the banks," said Georg Bongen, the leader of the Thyssen works council.

Krupp, the smaller of the two firms, had been advised by adviser banks and its own market analysts that it could not survive beyond the year 2000 on its current scale of productions. Repeated overtures to Thyssen had all been rebuffed, however, leaving no option but an almost unprecedented hostile bid.

The takeover attempt sparked spontaneous work stoppages by thousands of steel workers in the Ruhr, forcing the intervention of politicians.

Wolfgang Clement, the economics minister in the state of North Rhine- Westphalia where the two groups are based, said he expected a co-operation deal to be reached. Mr Clement, a rising star in the Social Democratic Party, described the talks as very constructive. "I do not think the differences are dramatic," he added. "I want to see a merger in the end and not a hostile takeover.''

Mr Clement's views were echoed by Hans-Olaf Henkel, president of the Federation of German Industry, who said he also believed Krupp and Thyssen would find a way to unify their steel operations to remain competitive but avoid massive job losses.

"I would say a merger would be good for both companies, particularly in the long term," Mr Henkel said. A study by Deutsche Bank, Dresdner Bank and Goldman Sachs showed a merger could bring positive results by as early as spring 1998. According to the bankers' report, commissioned by Krupp at the cost of DM200m, both companies would be able to sell off a number of units and Krupp could repay the takeover debts by the year 2000.

As Frankfurt's business district braced for an invasion by thousands of steel workers, the Deutsche Bank board member who played both sides in the Thyssen takeover battle hinted yesterday that he would soon resign from the steel-maker's supervisory board.

Ulrich Cartellieri was forced to issue a "personal statement" to defend himself against accusations of a conflict of interest. Mr Cartellieri had known about Krupp's hostile takeover bid prepared by his bank, but had failed to inform the company he was advising, Thyssen.

Comment, page 21

Start your day with The Independent, sign up for daily news emails
News
Young Winstone: His ‘tough-guy’ image is a misconception
people
Arts and Entertainment
Man of action: Christian Bale stars in Exodus: Gods and Kings
film
Sport
Adnan Januzaj and Gareth Bale
footballManchester United set to loan out Januzaj to make room for Bale - if a move for the Welshman firms up
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
filmIdris Elba responds to James Bond rumours on Twitter
PROMOTED VIDEO
News
Hackers revealed Oscar-winning actress Lawrence was paid less than her male co-stars in American Hustle
people
Arts and Entertainment
Ellie Levenson’s The Election book demystifies politics for children
bookNew children's book primes the next generation for politics
Sport
Wayne Rooney warms up ahead of the English Premier League football match between Tottenham Hotspur and Manchester United at White Hart Lane
football
News
Outspoken: Alexander Fury, John Rentoul, Ellen E Jones and Katy Guest
newsFrom the Scottish referendum to the Ice Bucket Challenge, our writers voice their opinions
Arts and Entertainment
Lena Headey as Cersei Lannister in Game of Thrones
film
News
i100
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Sport
Yaya Sanogo, Mats Hummels, Troy Deeney and Adnan Januzaj
footballMost Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
News
Nigel Farage celebrates with a pint after early local election results in the Hoy and Helmet pub in South Benfleet in Essex
peopleHe has shaped British politics 'for good or ill'
Voices
Strictly Come Dancing was watched by 6.9m viewers
voicesIt has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
News
Danielle George is both science professor and presenter
people
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?
Finally, a diet that works: Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced

Finally, a diet that works

Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced
Say it with... lyrics: The power of song was never greater, according to our internet searches

Say it with... lyrics

The power of song was never greater, according to our internet searches
Professor Danielle George: On a mission to bring back the art of 'thinkering'

The joys of 'thinkering'

Professor Danielle George on why we have to nurture tomorrow's scientists today
Monique Roffey: The author on father figures, the nation's narcissism and New Year reflections

Monique Roffey interview

The author on father figures, the nation's narcissism and New Year reflections
Introducing my anti-heroes of 2014

Introducing my anti-heroes of 2014

Their outrageousness and originality makes the world a bit more interesting, says Ellen E Jones
DJ Taylor: Good taste? It's all a matter of timing...

Good taste? It's all a matter of timing...

It has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Olivia Jacobs & Ben Caplan: 'Ben thought the play was called 'Christian Love'. It was 'Christie in Love' - about a necrophiliac serial killer'

How we met

Olivia Jacobs and Ben Caplan
Bill Granger recipes: Our chef's breakfasts will revitalise you in time for the New Year

Bill Granger's healthy breakfasts

Our chef's healthy recipes are perfect if you've overindulged during the festive season
Transfer guide: From Arsenal to West Ham - what does your club need in the January transfer window?

Who does your club need in the transfer window?

Most Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
The Last Word: From aliens at FA to yak’s milk in the Tour, here’s to 2015

Michael Calvin's Last Word

From aliens at FA to yak’s milk in the Tour, here’s to 2015