Going West -- Cash-Rich German Companies On Overseas Shopping Spree

The years when flabby, slow-moving German companies were seen as sitting targets for foreign predators are over. After long years of finding themselves on the defensive, of constant scrimping and saving to boost their stock market value, the leaner, fitter and richer German companies are now turning the tables and snapping up industry rivals abroad.

In the past, U.S. companies were primarily the hunters, but some of them have now become the hunted as German groups set their sights westwards. BASF, already the world's biggest chemicals company, is the latest in an ever-lengthening list of German players that are going west, with its plans to buy U.S. firm Engelhard. And with a warchest running to billions of euros , BASF is even prepared for the possibility that the transaction will be a hostile one.

According to data compiled by Thomson Financial, the number of mergers and acquisitions involving German companies fell in 2005 from 2004, but the value of the deals, at 80 billion euros (US$97 billion), was higher than in the previous five years. "German companies have raised earnings, cut jobs and sold assets, allowing them to massively cut debt and amass big warchests," said an analyst at HypoVereinsbank, Andreas Heine.

One of the biggest deals this year was the acquisition of British logistics specialist Exel by the German postal service, Deutsche Post. The 5.6-billion-euro deal catapulted the German group to the world's number one logistics group.

In the same sector, the state-owned German railway operator, Deutsche Bahn, followed Deutsche Post's example and snapped up the Californian logistics firm Bax Global for 1.0 billion euros in November.

In the steel sector, Canadian firm Dofasco is the object of a fierce takeover battle between German ThyssenKrupp and Luxembourg-based rival Arcelor. The cost of the deal for ThyssenKrupp, seen as the preferred suitor by the management of Dofasco, is 3.65 billion euros.

Copyright Agence France-Presse, 2006

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