Steel giant Thyssen fights takeover bid
German merger battle: Unions fear pounds 2.6bn deal instigated by small er rival Krupp-Hoesch would lead to heavy job cuts
Wednesday 19 March 1997
The combined group would have sales of pounds 24bn and crude steel production of 18.1 million tonnes, making it the third- largest steelmaker in the world and eclipsing British Steel as Europe's number one producer.
But German steel unions fear that the takeover, masterminded by the controversial Krupp-Hoesch chairman, Gerhard Cromme, will merely prove the prelude to heavy job cuts with at least 10,000 of the 110,000-strong Thyssen workforce under threat.
"We will not just sit back and let this happen to us. Basically this is undiluted capitalism, pure Wild West methods," said Willy Siegerer, the deputy head of the Thyssen works council.
However, other steel makers gave a guarded welcome to news of the bid, suggesting it could ease the continuing problem of overcapacity that has held prices down and wrought so much damage on the European steel industry.
British Steel said: "Anything which could lead to a reduction in capacity in Europe would be fairly positive."
The UK Steel Association also gave cautious backing. Ian Rodgers, its director of policy, said: "Germany has been the one member state where there is a need for more rationalisation. If the intention of this bid is to help achieve rationalisation then that can only help the situation in Europe generally."
Steelmaking capacity within the European Union is 203 million tonnes compared with actual crude steel production last year of 148 million tonnes. An attempt by the European Commission four years ago to broker a big reduction in capacity in return for approving further state aid for the steel industry resulted in fewer than 10 million tonnes of capacity being removed.
Hostile bids are virtually unheard-of in Germany, making yesterday's move by Krupp-Hoesch, in which the Iranian government has a 25 per cent stake, highly unusual. However, it is consistent with Mr Cromme's track record. He created Krupp-Hoesch in 1991 by engineering Fried Krupp's hostile takeover of Hoesch with the loss of 20,000 jobs.
Union members from both companies surrounded Krupp-Hoesch's head office in Essen yesterday, shouting to Mr Cromme to address them. Mr Cromme, known in the industry as "the job-killer", hid behind bullet-proof glass and shouted back.
Reports of 30,000 job losses in the steel industry after a takeover of Thyssen were "pure panic-mongering," he told the protesters. There was, he assured them, no plan to close any plants, though the merged company would try to streamline production. The workers responded at one point by trying to storm the building and then pelting it with eggs.
Krupp-Hoesch is offering DM435 per share, a 25 per cent increase on the final price reached before shares in both companies were suspended in Frankfurt. Thyssen shares jumped to DM410 in unofficial trading after the announcement.
Krupp-Hoesch employs 66,000 people, and in the year to December reported a net profit of DM208m on sales of DM24bn. For the year to September Thyssen reported a net profit of DM350m on sales of DM38.7bn. It had a market value of just under DM12bn before the shares were suspended.
Krupp-Hoesch said the planned merger was in response to intense global competition. In order to stay competitive, German industry had to cut its costs of production, logistics and distribution.
"It is indispensable to achieve sufficient size in business in accordance with global standards," Krupp-Hoesch said in a statement.
Analysts say that synergies between the two companies in flat steel products and automotive pressings would make the merger attractive and could pave the way for the cost cuts needed to improve Germany's competitiveness against other European steel makers. A tonne of crude steel produced by Thyssen costs DM160, compared with DM155 in France and DM120 by British Steel.
For that reason, the bid is not likely to be opposed by the German authorities, but it will have to be approved by the European Commission.
How British Steel measures up
British Steel Krupp-Thyssen
Turnover pounds 7bn pounds 24bn
Pre-tax profits pounds 1.1bn pounds 210m Employees 54,000 195,000
Production costs pounds 45 pounds 60
World's top steel producers
Company Output (millions tonnes)
1 Nippon Steel 27.8 2 Posco 23.4 3 Krupp-Thyssen 18.1
4 British Steel 15.6 5 Usinor Sacilor 15.5 6 US Steel 12.1 7 NKK 12.0
8 Arbed 11.5 9 Kawasaki 11.1 10 Sumitomo 10.5
- 1 President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
- 2 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 3 Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations
- 4 Sir Winston Churchill’s family begged him not to convert to Islam, letter reveals
- 5 AirAsia flight QZ8501 missing: Search for plane carrying 162 passengers from Indonesia to Singapore suspended overnight
President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
UK weather: Warning for more snow and ice as freezing temperatures and gales hit Britain
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations
AirAsia flight QZ8501 missing: Search for plane carrying 162 passengers from Indonesia to Singapore suspended overnight
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Millions of Britons struggling to feed themselves and facing malnourishment
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Nigel Farage: Ukip leader named 'Briton of the year' by The Times
Immigrants make UK racist, says Ukip councillor Trevor Shonk
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...