Messer growth strategy

06 March 2000 00:00  [Source: ICB]

Industrial gases producer, Messer Griesheim, is reviewing options for the future following the failure of takeover talks with German rival Linde.

In Frankfurt last week, Messer's new chairman Klaus-Jürgen Schmieder, the former Hoechst finance chief, said a decision must be made quickly, as market consolidation has progressed considerably in the past year. An initial public offering, a sale to financial investors or a merger with another gases producer are all possibilities, he said.

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Market observers believe the latter alternative is the most likely. Tapping the stock market was reviewed earlier and rejected, and so far venture capitalists have shown little interest in the gases sector. Among industrial investors, US-based Praxair, seeking to strengthen its position in Europe, is regarded as the favourite.

Hoechst successor Aventis, which owns 66.6% of Messer, intends to unload its stake as soon as possible, while the Messer family, which holds 33.3% of the shares, wants to stay in the business. The family had favoured a sale to Linde, which it said was willing to preserve the company's independence.

Messer's portfolio will be streamlined pending a sale or merger, Schmieder said. He declined to comment on which segments might be dropped, but said air separation plants are a profitable core businesses that will be kept. Geographically, he said Asia will remain a key area for Messer, but individual engagements in Latin America could be given up.

The cutting and welding business has been spun off and sold to a Messer family-owned company at the end of 1999. Aventis will be paid in cash for its stake, but Schmieder said the size of the payment has not yet been determined.

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