30 June 2013, LUCERNE, Switzerland – Russian tycoon Viktor Vekselberg has launched a bid to control Swiss steelmaker Schmolz+Bickenbach (STLN.S) after he failed to win support from shareholders to raise more capital and install his preferred candidate on the company’s board.
On Friday, Vekselberg’s investment vehicle, Renova, agreed to pay a group of long-time shareholders about 58 million Swiss francs for a 20.46 percent stake in the Swiss firm. The group, Schmolz+Bickenbach GmbH & Co KG (S+B KG), descendents of the company’s founders, retains a similar stake.
The two parties, which have been allies in fighting for a restructuring at Schmolz+Bickenbach, then agreed to pool their shares, giving them a combined stake of 40.46 percent. This forces new stakeholder Vekselberg, under Swiss law, to make an offer to buy the remaining shares in Schmolz+Bickenbach.
In a statement, Renova’s subsidiary, Venetos Holding AG, said it planned to make an offer around July 12 of 2.85 Swiss francs for each Schmolz+Bickenbach share. This offer is below the closing price of 2.90 francs on Friday.
The tender offer is worth 200 million Swiss francs for the remaining 59.5 percent of Schmolz+Bickenbach that Renova and S+B KG do not already own, Renova spokesman Rolf Schatzmann told Reuters.
The value of the offer could rise to 397 million francs if the 330 million francs capital increase decided at Friday’s AGM is executed while the tender offer is running. In that case, Renova would still bid for 59.5 percent of the company’s shares but would then offer only 1.26 francs per share.
However, Schatzmann said the offer is just a way of gaining control of the company to force a restructuring. He said Renova hopes existing shareholders will retain their shares rather than sell them.
Schmolz+Bickenbach’s board and its founding family have been at odds over the future direction of the company, with the founders believing that the firm needs to raise more capital to secure its financial strength.
Vekselberg typically seeks to gain influence over the companies he invests in by building up a substantial minority stake, as he has done previously at Swiss machinery and equipment makers Sulzer (SUN.VX) and Oerlikon (OERL.S).
Earlier on Friday, Schmolz+Bickenbach shareholders backed a rights issue to raise $350 million, rebuffing calls from S+B KG which had allied with Vekselberg to seek a bigger capital increase of 430 million francs ($453 million).
Schmolz+Bickenbach will now offer shareholders seven new shares for two existing shares at a subscription price of 0.80 Swiss francs, a discount of 74 percent to Thursday’s closing price. The new shares will begin trading on July 10.
The company said it would use the money to cut interest payments by repaying around $200 million in loans.
Like other European steelmakers, Schmolz+Bickenbach is struggling to find buyers for its steel because the euro zone’s problems have flattened demand in the region, while slowing growth elsewhere has limited exports of goods such as cars.
The company, which has around 10,000 employees, had opposed the larger capital increase as an excessive burden for existing shareholders.
(Reporting by Albert Schmieder and Caroline Copley; Writing by Alice Baghdjian and Caroline Copley; Editing by Ruth Pitchford and Richard Chang)