Lufthansa seeks takeover of Swiss
14 March 2005, FRANKFURT/ZURICH - German airline Lufthansa is seeking the complete takeover of struggling airline Swiss, with separate offers being prepared for small-time shareholders and for the majority stakeholders, industry sources said Monday.
14 March 2005
FRANKFURT/ZURICH - German airline Lufthansa is seeking the complete takeover of struggling airline Swiss, with separate offers being prepared for small-time shareholders and for the majority stakeholders, industry sources said Monday.
A day after the announcement by Lufthansa and Swiss that they had settled terms on a business model that will keep the name "Swiss" on planes and preserve it as a separate unit, the matter was left to the major shareholders with their 86 percent stake in Swiss.
Reports in Frankfurt, where Lufthansa has its main operations hub, said small-time shareholders representing 14 percent of Swiss stocks were to be offered about CHF 60 million (EUR 39 million) in the takeover offer.
But other conditions were to apply to the majority stakeholders, chiefly the Swiss federal and cantonal governments, holding the remaining 86 percent.
In media reports, there was speculation that the stake could be sold for a symbolic price of CHF 1 or EUR 1.
As of closing time on stock markets last Friday, Swiss shares were valued at around EUR 355 million.
In the announcement on Sunday, Lufthansa is to proceed to an offer for Swiss shares that are on the open market, valuing them at an average of the trading price in recent weeks.
There has been speculation for more than a year that the German airline would step in to salvage what is left of Swiss, the company that emerged from the collapse in 2001 of Swissair.
Initially Swiss rejected Lufthansa's interest and tried vainly to establish an alliance with British Airways.
"The jointly supported business model involves a combination of strengths of the two companies while preserving the autonomy of Swiss as far as possible," said a Lufthansa statement. "Cornerstones include the preservation of Switzerland's air connections and of the Swiss brand."
Swiss has struggled ever since it emerged from the collapse of Swissair in 2001. In 2003, it rejected a takeover by Lufthansa, at the same time that the airline's fleet and payrolls were slashed to try to cut costs.
Swiss lost money for two and a half years before finally managing to post a thin CHF 16 million (EUR 10 million) profit in the third quarter of 2004. In January, the Swiss executive board agreed to reduce the fleet by at least 13 regional planes and to cut a further 800 to 1,000 jobs in a bid to lower costs by CHF 300 million (EUR 193 million) annually.
On the Frankfurt Stock Exchange, Lufthansa shares were buoyed by the developments, showing a 1.7 percent rise by late morning to EUR 11.36, as against overall 0.7 percent losses on the DAX.
On the Zurich exchange, Swiss shares rose by some 5.3 percent to CHF 10.95 (EUR 7.06), the gains coming atop the nearly 20 percent improvement which shares showed before the weekend amid the signs of a possible Lufthansa takeover bid.
Subject: German news