Workers deal

Spanish construction giant Actividades de Construccion y Servicios (ACS) appears to be succeeding in its plan to acquire German rival Hochtief as its stake in the company creeps towards the 30-percent mark.

ACS announced on Thursday it owned 27.72 percent of the voting rights in Germany's biggest builder, not including the 2.5 percent it is due to obtain from Southeastern Asset Management.

Under German regulations, a 30 percent stake gives ACS the right to buy shares in the market without renewing its bid and without making further disclosures on its holding in Hochtief as it tries to build a controlling stake of more than 50 percent

The Spanish concern has been stalking Hochtief since September and made an official takeover bid at the beginning of December. Hochtief categorically rejected the bid, saying it did not make sense from either a financial or strategic standpoint. ACS countered this by raising its share-swap offer to exchange nine ACS shares for every five Hochtief shares. Its previous bid offered a ratio of eight to five.

The improved offer seems to have paid off. By Wednesday evening, ACS swap-offer had gained it almost 360,000 shares in Hochtief.

Workers' blessing

Another potential obstacle to the takeover was removed on Wednesday, when ACS and trade union IG Bau made a surprise announcement. Union representatives have agreed to remove their objections to the takeover in exchange for assurances that there would be no redundancies as a result of restructuring. The deal is guaranteed until 2013.

"This means the biggest worry for Hochtief employees is off the table," IG Bau chairman Klaus Wiesehuegel said. "The takeover will not happen on the backs of Hochtief workers."

The trade union's agreement has provoked an angry response from Hochtief's managers and company labor representatives.

"I am completely dismayed and amazed by the actions of the union," complained Siegfried Mueller, chairman of the Hochtief group works council, who claims he was unaware of the talks. "This was not agreed," he told German newspaper Die Welt, adding that the deal was not worth the paper it was written on without his consent.

Bruised egos

Wiesehuegel was unrepentant, saying IG Bau had had no intention of angering Hochtief's management or works council.

"The agreement is exclusively about securing employees' rights, should ACS's takeover bid be successful," he said, adding that IG Bau was perfectly within its rights to enter negotiations on its own.

"We're surprised that Mueller only sees this agreement negatively," Ruprecht Hammerschmidt, spokesman for IG Bau told Deutsche Welle. "If he didn't know about the negotiations, why did he get so worked up when we announced we were going to talk to ACS on December 1?"

"Why is he blocking everything? What is the alternative? Our agreement secures the jobs and the location in Germany," Hammerschmidt said.

The spokesman also denied that the agreement makes the takeover more likely. "The question of whether it goes through or not is no longer down to the approval of the trade unions. The decision is up to the shareholders and the shareholders alone."

ACS dismissed objections to the agreement. "Hurt vanities don't help the workers," an unnamed ACS source told Die Welt newspaper.

Hochtief chairman Herbert Luetkestratkoetter has warned a takeover by ACS could have serious consequences for Germany. The Spanish company has debts worth around nine billion euros, which could have a negative impact on the relatively stable Hochtief, which employs 11,000 people across the nation.

Author: Ben Knight (Reuters, dpa)
Editor: Sam Edmonds