Private equity firms make final push to charm Thyssenkrupp union leaders
Groups seek support for bids to buy German conglomerate’s prized elevator unit
Private equity firms are engaged in a last-minute charm offensive to win over Germany’s most powerful union as they seek support for their bids to purchase Thyssenkrupp’s elevator unit, the company’s crown jewel.
Three private equity bidders, who value the elevator business at roughly €15.5bn, are prepared to offer job guarantees to IG Metall, according to people familiar with the negotiations.
The race to buy the unit is reaching a climax, after months of deliberations. Final offers in what could be one of Europe’s biggest private equity deals are expected next week, with the company planning to make a decision by the end of the month. It is still also considering a possible float of the elevator division.
The union represents most of the elevator unit’s 5,000 German employees, out of a total workforce of more than 50,000. Three private equity consortiums — one led by Blackstone and Carlyle, another led by Advent and Cinven, and a third led by Brookfield — have submitted rival bids. Another bid has come from Finnish lift maker Kone, in partnership with private equity group CVC.
The trade union’s views “are being heard” as the company picks a suitor, a person involved in the process said. “It’s important for a big employer in a region, a prominent conglomerate, to protect the workforce.” All of the bidders “will do what they have to do” to win union leaders over, another said.
Members of the company’s supervisory board, which will ultimately have to approve any buyer, have been advised to consider job security when weighing the bids, alongside price and the certainty that a deal will go through. Bidders have been told they must present their takeover plans to union leaders as part of the process.
The union has indicated that it is warming to private equity bidders. This marks the latest sign of a profound shift within Germany’s labour movement, which once lambasted the so-called “vultures” vying to take over homegrown companies in the hope of improving their efficiency.
Last year, IG Metall broke with convention by preferring a bid by private equity groups for the ailing lighting company Osram, despite a higher bid from Austrian rival AMS, which eventually won.
Kone has offered about €17bn for Thyssenkrupp’s elevator division in conjunction with CVC. But workers’ representatives are concerned that being purchased by a competitor would lead to another run-in with antitrust authorities in Brussels and Washington, which would demand that the business be broken up.
Thyssenkrupp’s management, led by interim chief executive Martina Merz, would also prefer to avoid a protracted negotiation with the European Commission, and will consider the certainty and speed of any potential offer, according to people close to the company.
The steel and materials conglomerate desperately needs the cash from any sale to fill a €4bn black hole in its finances and fund more than double that amount in pension liabilities.
IG Metall has stated a strong preference for maintaining a stake in the elevators division, in order to benefit from future profits.
Thyssenkrupp’s supervisory board, which includes representatives from IG Metall, as well as the activist shareholder Cevian and the Krupp Foundation, will assess the rival bids at a meeting on February 27, the people said.