Thyssenkrupp-Kone elevator merger ‘would trigger legal war’ Schindler

ThyssenKrupp elevators at its headquarters in Essen, western Germany. Thyssenkrupp went deeper into the red in its 2018-19 fiscal year. (AFP)
Short Url
Updated 14 February 2020

Thyssenkrupp-Kone elevator merger ‘would trigger legal war’ Schindler

  • Abu Dhabi sovereign fund consortium also said to be in running for company

FRANKFURT: Swiss elevator maker Schindler would embark on an all-out antitrust offensive in the courts to stall any deal to combine Thyssenkrupp’s lift division with rival Kone, board member Alfred Schindler told Reuters.

His comments came a day after the deadline for bids for Thyssenkrupp Elevator, with Finland’s Kone and three private equity consortia vying to buy it in a deal sources say could be worth up to $18.6 billion.

A Kone-Thyssenkrupp Elevator merger would create the world’s biggest lift maker, leapfrogging market leader Otis, and Schindler in second place.

“We would probably file lawsuits in Europe, the United States, Canada, China and possibly Australia. These cases would take at least three to four years,” said Schindler, who is now chairman emeritus of the company he ran for 26 years. He said that other rivals would probably take legal action too: “You can safely assume that neither Otis nor Schindler will simply accept being driven out.”

Thyssenkrupp and Otis declined to comment. A Kone spokeswoman said it believed there was room for consolidation in the sector. Shares in Kone fell as much as 3.9 percent after Schindler’s comments while Thyssenkrupp rose slightly.

Once a symbol of Germany’s industrial power, Thyssenkrupp is struggling with €12.4 billion (13.5 billion) of debt and pension liabilities after years of ill-fated investments, and needs to raise money from its prized elevator division to restructure. Thyssenkrupp’s supervisory board is due to meet on Feb. 27 and a decision on the fate of the elevator business could be made then, two people familiar with the matter said.

Besides selling all or part of the business, Thyssenkrupp is considering an initial public offering, though sources said this option was less likely. Solely based on bids, Kone and a consortium of Blackstone, Carlyle and the Canada Pension Plan Investment Board look best-placed to reach the final round but no decision has been made, the people said.

Kone has made a non-binding bid of €17 billion while the consortium has offered about €16 billion. It was not clear whether Kone had improved its earlier offer. A consortium comprising Advent, Cinven and the Abu Dhabi Investment Authority and an alliance between Canada’s Brookfield and Singapore’s Temasek are also in the running, sources have said.

While a sale to Kone would probably raise the most cash for Thyssenkrupp, the beleaguered conglomerate is concerned it could trigger antitrust investigations where the combined company would be a major player, such as Europe and the US. “Such a hypothetical takeover would . . . have considerable effects on the structure of the relevant markets and most likely lead to significant negative impacts on effective competition in many markets,” a DICE Consult report said.

Kone has drawn up plans to hand Thyssenkrupp’s European assets to private equity firm CVC but the European Commission typically prefers industrial buyers that can compete better with the firm offloading assets.


Saudi minister: OPEC+ will take responsible approach to virus

Updated 26 February 2020

Saudi minister: OPEC+ will take responsible approach to virus

  • Saudi Arabia supports the further oil production cut, but Russia is yet to announce its final position on the matter

RIYADH: Saudi Arabia’s energy minister said on Tuesday he was confident that OPEC and its partner oil-producing nations, the so-called OPEC+ group, would respond responsibly to the spread of the coronavirus.

He also said Saudi Arabia and Russia would continue to engage regarding oil policy.

“Everything serious requires being attended to,” the minister, Prince Abdul Aziz bin Salman, told reporters at an industry conference in Riyadh.

An OPEC+ committee this month recommended the group deepen its output cuts by an additional 600,000 barrels per day.

Saudi Arabia supports the further oil production cut, but Russia is yet to announce its final position on the matter.

The minister said he was still talking with Moscow and that he was confident of Riyadh’s partnership with the rest of the OPEC+ group.

“We did not run out of ideas, we have not closed our phones. There is always a good way of communicating through conference calls,” he said.

Regarding the coronavirus, which has impacted OPEC member Iran, he said OPEC+ members should not be complacent about the virus but added he was confident every OPEC+ member was a responsible and responsive producer.

The flu-like SARS-CoV-2 virus, which first broke out in China, has now spread to more than 20 countries.

“Of course there is an impact and we are assessing, but we’ll do whatever we can in our next meeting and we’ll address that issue,” UAE Energy Minister Suhail Al-Mazrouei said at the same industry conference.

Saudi Aramco CEO Amin Nasser on Monday said he expected a short-lived impact on oil demand.

“We think this is short term and I am confident that in the second half of the year there is going to be an improvement on the demand side, especially from China,” he said.

Oil climbed on Tuesday as investors sought bargains after crude benchmarks slumped almost 4 percent in the previous session, although concerns about the global spread of the virus capped gains.