The billionaire investor Friedhelm Loh says he will not be drawn into a bidding war for the industrial robotics specialist Kuka, despite German concerns the firm will be sold to a Chinese buyer.
In a wide-ranging interview with Handelsblatt, Mr. Loh, who holds a 10 percent stake in Kuka, refused to say if he would sell to China’s Midea, whose controversial bid values the German firm at around €4.6 billion ($5.2 billion).
Midea, a large maker of home appliances with revenues of more than $22 billion, announced details of its bid last week: It is offering €115 for shares in the Augsburg-based robotics firm. Midea already owns 13.5 percent of Kuka, and has said it wants to purchase no more than 30 percent of the company.
But according to German takeover law, it is obliged to make an offer for all shares. This potentially puts Mr. Loh’s holding in play, as well as the 25.1 percent held by the private German engineering firm Voith.
Midea has insisted that it has no intention of a full take-over and that Kuka will be granted full operational independence. Nonetheless, the acquisition is one in a long line of high-profile Chinese bids for German firms, which has raised questions about the possible transfer of sensitive advanced technology.
Kuka’s robotics technologies are used by many well-known German industrial firms, including some of the country’s best-known automakers. Angela Merkel’s coalition government has said it will not oppose any Chinese acquisition of Kuka, but has hinted that it would prefer a counterbid from a German or European firm.
“We simply could not compete with the current offer. It would put too much strain on us and massive limits on our investment plans.”
Mr. Loh told Handelsblatt that he had been asked if his investment group would consider a counter offer. But he emphatically ruled this out. “We simply could not compete with the current offer,” he said. “It would put far too much strain on my company and put massive limits on our own investment plans.”
Mr. Loh suggested that Voith had probably also been approached. The German government is said to have looked to Siemens as a possible white knight, but the engineering giant ruled out any involvement.
Mr. Loh refused to be drawn on whether he might use the bid as an opportunity to sell his stake. His own manufacturing group currently benefited from Kuka’s know-how, he said, but that could change with a different ownership structure.
“We’ll test things out when we know more,” he said. “But you do have to ask yourself if an investment is worth it if you don’t have at least a blocking minority.”
Midea’s bid was a generous one, according to Low. The Chinese company was, in effect, paying more than a 25 percent premium on the current share price. “Whoever takes over Kuka now will have to think about how that investment is going to be amortized,” he said, adding that making that investment pay off would require remarkable synergies with the acquiring company.
However, Mr. Loh was openly critical of Kuka chief executive Till Reuter’s public support for the Chinese bid. Kuka has not yet officially recommended the Midea bid, but Mr. Reuter, at last month’s annual shareholders’ meeting, welcomed the Chinese offer with enthusiasm.
“I didn’t think that was really the right thing to do,” Mr. Loh said. “Directors have a responsibility to be neutral. Proceeding as he did, Mr. Reuter gave the bid publicity which it had not yet earned at that point.”
Mr. Loh was at pains to emphasize that his investment in Kuka, like his investments elsewhere, were not motivated by a desire to make a quick killing. If his industrial group made an acquisition, he said, it was usually because of potential synergies. His more personal investments tended to be made on the basis of intellectual curiosity.
“Kuka came to us when things were going relatively badly for them,” Mr. Loh said. “My interest there was technically oriented. I am a curious guy… It wasn’t about the share price.”
Similarly, his group’s interest in steel distributor Klöckner was not a short-term one, he asserted. “I am not a speculator,” he said. “I am just too grounded and technologically minded for that.”
In recent months, Mr. Loh’s industrial group has taken advantage of Klöckner’s share price to increase its stake from 5 percent to more than 25 percent.
Pointedly, Mr. Loh insisted his own industrial group was not on the market. “As a global leader, you are always under observation. Anyone – Chinese, American, whatever – can read about us. And we regularly get offers, ” he said. “I have never reacted to them. The company is just not for sale.”
Martin Wocher is an editor with Handelsblatt, focusing on the mechanical engineering and steel industries. Anja Müller writes about family and small- and medium-sized firms. To contact the authors: email@example.com and firstname.lastname@example.org