Disposal of Siemens Enterprise Networks (Corporate Telecoms0
[Nokia mention]
>> Siemens Telecoms Bidder Pulls Out [source]
Lucas van Grinsven (Amsterdam)
Jens Hack (Munich)
Reuters
November 6, 2006
tinyurl.com
One of the last remaining bidders for Siemens AG's (SIEGn.DE) corporate telecoms business has pulled out and believes Siemens expects to fetch too high a price for the unit, a source close to the talks said on Monday.
One of the remaining bidders for Siemens' loss-making Enterprise Networks unit, instead of offering money, had asked Siemens to cough up a dowry for the unit, the source said, adding that the unit bleeds 300 million euros ($381.4 million) of operating losses a year.
The source asked that the potential bidder should not be identified.
Siemens Chief Executive Klaus Kleinfeld had promised to sell before the end of the year and may have hoped for a book gain of around 2 billion euros on the unit, which was the value according to analysts some months ago.
But that valuation has come under pressure after another divested Siemens business -- making mobile handsets -- was attacked for failing to protect jobs, sending a message to investors interested in the Enterprise Networks unit that it would be tough to carry out a restructuring in Germany.
In the absence of the large book gain, Kleinfeld may find himself subject to criticism over his recommendation to turn down an 8 billion euro cash offer for the combined Enterprise and Telecommunications business earlier this spring.
That offer in April came from private equity investors Permira [PERM.UL], Blackstone [BG.UL], Apollo Management L.P. and Merrill Lynch (MER.N:) who were ready to pay cash, the source said.
"Instead of getting 8 billion euros in cash for his shareholders, he got them a deal to merge Siemens telecoms unit with Nokia Oyj (NOK1V.HE) valuing it at 6 to 7 billion euros and a promise to sell the enterprise unit that was left out of the merger for another 2 billion," said the source who was close to the negotiations.
Siemens declined to comment.
BenQ Mobile Failure
Enterprise Networks has around 16,000 staff and about 3.5 billion euros in annual revenues. Analysts have said it will cost hundreds of millions of euros to restructure.
The political upheaval which caused the devaluation of the Networks unit was caused by the bankruptcy of mobile phone business BenQ Mobile.
Siemens sold its loss-making handset business to Taiwan's BenQ (2352.TW) a year ago. BenQ had pledged to keep open manufacturing sites in Germany and retain the unit's 3,000 staff in the country.
But BenQ Mobile continued to lose market share and it filed for insolvency in Germany last month, after parent BenQ decided to draw a line under the 840 million euros it had poured into the business over the previous year.
German Chancellor Angela Merkel, backed by the Bild newspaper, called on Siemens to take responsibility for its former staff facing unemployment. Siemens said it would do its best to rehire the people for vacant posts.
"The BenQ Siemens failure has been a warning for interested bidders in Enterprise Networks," the source said.
Last month, a source close to the negotiations said the disposal of the Enterprise Networks, managed by Deutsche Bank and Morgan Stanley, had already been going more slowly than planned.
Although strategic partners such as Cisco (CSCO.O:) had been approached, interest had come mainly from financial investors, such as private equity firms. ###
- Eric - |
