Suicide billionaire's German empire reaches rescue deal

8th January 2009, Comments 0 comments

Under the terms of the agreement, which Merckle himself had been negotiating prior to his suicide near his home, his VEM group said it has secured a bridging loan from a consortium of lenders.

Frankfurt -- Two days after German billionaire Adolf Merckle threw himself under a train, his troubled industrial empire said Wednesday it had reached a rescue deal with banks but with strings attached.

Under the terms of the agreement, which Merckle himself had been negotiating prior to his suicide near his home late Monday, his VEM group said it has secured a bridging loan from a consortium of lenders.

But in return -- sources told AFP the loan is worth 400 million euros (545 million dollars) -- VEM has to sell its generic drug company Ratiopharm and Merckle's son Ludwig has to leave the firm, a statement said.

Ratiopharm employs 5,400 people and last year posted sales of 1.8 billion euros (2.5 billion dollars). Merckle's reportedly heavily debt-ridden group also includes cement giant HeidelbergCement and drugs wholesaler Phoenix.

The global financial crisis pushed his businesses onto the rocks and Germany's fifth richest person also lost a considerable part of his fortune after betting the wrong way on Volkswagen shares last year.

For now it appears that the Merckle empire, which employs some 100,000 people and has revenues of 35 billion euros, will not be fully broken up, although auditors KPMG are still combing through its books.

"Only Ratiopharm is mentioned in the agreement," a spokesman for the firm told AFP.

The body of the 74-year-old Merckle, who was worth more than nine billion euros and was 94th on the Forbes rich list, was found near train tracks on Monday evening after he had been reported missing by his family.

The Bild daily reported that the driver of the train that killed Merckle did not even notice what happened and that the body lay there for two hours before it was seen by another driver at around 7:30 pm (1830 GMT).

Prosecutors said an identification -- which is yet to be formally confirmed -- was only possible with DNA testing.

Merckle left behind a suicide note apologizing to his wife Ruth and their four children, Bild said.

On Tuesday, the family said that the damage done by the financial crisis and the "powerlessness of not being able to do anything, broke this passionate family businessman and he ended his life."

Born in Dresden in eastern Germany in 1934, Merckle inherited in his mid-30s a pharmaceuticals company from his father with just 80 employees. Step by step, he built this up into the giant it is today.

He embodied the type of shrewd family businessman that form the backbone of Europe's biggest economy and in particular that of the wealthy Swabia region of Baden-Wuerttemberg in southwestern Germany.

Merckle was a man of unremarkable and grandfatherly appearance who enjoyed mountain holidays in the Andes and Himalayas.

He avoided publicity and lived relatively frugally and unostentatiously in the small town of Blaubeuren.

"I have already survived quite a lot of 'stock market crashes'," Merckle said in a rare press interview last month. "But I was not prepared for a banking and financial crisis on this scale."

AFP/Expatica

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