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.