Adolf Merckle: act of despair.

Heidelberg suicide prompts sell-off speculation

Published:  20 April, 2009

FRANKFURT: Bain Capital, Goldman Sachs and TPG are considering an investment in Heidelberg Cement, the debt-ridden cement maker belonging to the family of Adolf Merckle, the German billionaire who committed suicide recently, according to reports from Bloomberg.

Dr Merckle, one of Europe’s richest men, threw himself in front of a train after feeling the pressures of the credit crunch on his business empire.  Heidelberg Cement owns British-based Castle Cement and Hanson, which it bought for £8bn in 2007.

The billionaire’s suicide was said to be prompted by hundreds of millions of euros of losses in VW share trading and the rapid crumbling of his pharmaceuticals empire.

The 74-year-old head of a conglomerate, which included the Ratiopharm drugs group and HeidelbergCement, was believed to be the first credit crunch fatality in Germany’s business elite.

The act of despair came shortly after Dr Merckle has put together a 400 million euro bridging loan for his companies, but this was too little, too late.

The billionaire Merckle family’s Heidelberg Cement AG dropped in Frankfurt trading after his suicide and increased the likelihood the company will be sold to creditors.

Tobias Woerner, an analyst at MF Global Securities: “The banks have been in the sector before, and may take it on and wait for a recovery. Given the high level of debt we may see a piecemeal break-up of Heidelberg Cement.”

In mid-2007, Merckle paid $18bn to add British aggregates supplier Hanson Plc to its portfolio. At the time, it was claimed to be the biggest ever takeover in the building-materials industry.

The purchase, however, saddled the company with debt, including a 5.5bn euro credit loan maturing in May 2010. Moody’s Investors Service last month cut its rating on Heidelberg Cement, citing refinancing needs, a market slowdown and the possible financial problems of the major shareholder.

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