June 1, 2016 / 11:57 AM / 2 years ago

Germany working on Kuka counter-offer: Economy Minister says

BERLIN/FRANKFURT (Reuters) - Germany is trying to coordinate an alternative offer for industrial robot maker Kuka KU2G.DE following Chinese home appliance maker Midea Group Co Ltd’s 000333.SZ 4.5 billion euro takeover bid, Economy Minister Sigmar Gabriel said.

A staff member stands next to robots at a plant of Kuka Robotics in Shanghai, China August 13, 2014. REUTERS/Pete Sweeney/File Photo

Kuka is the latest and biggest German industrial technology group to be targeted by a Chinese buyer as the world’s second-largest economy makes the transition from a low-cost manufacturer into a high-tech industrial hub.

“There are efforts to formulate an alternative offer. Whether that materializes, we will see,” Gabriel told reporters in Berlin on Wednesday.

Government sources have said Berlin would examine how critical Kuka’s technology is for the digitization of industry, an economic priority for Chancellor Angela Merkel’s government.

Citing government and industry sources, Germany’s Sueddeutsche Zeitung newspaper reported earlier on Wednesday that Gabriel wanted to forge an alliance of German or European firms to prevent a sale to the Chinese company.

But Gabriel may face an uphill battle in convincing German companies that rely on the Chinese market for customers to try to snatch Kuka from its suitor.

Also, Midea will not be able to control Kuka fully anyway unless unlisted mechanical engineering group Voith and another investor, Loh, sell their stakes, totaling just over 35 percent of Kuka’s capital, or strike an agreement with the Chinese firm.

Voith CEO Hubert Lienhard has criticized as premature Kuka management’s positive stance towards Midea’s bid.

The Sueddeutsche Zeitung said Gabriel had proposed the idea of an alliance to a number of companies, including carmakers.

One banker familiar with the sector said big industry players in Europe would not be lured into a rival bid as the price was too high and the path to control of Kuka unclear.

Sources familiar with the matter told Reuters that German industrial group Siemens SIEGn.DE had considered a counterbid for Kuka but quickly dismissed the idea as too expensive.

Chief Executive Joe Kaeser told investors on Wednesday that digitization would continue to be an area of focus in any takeovers by Siemens but said he was unlikely to agree any mega-deals.

Daimler DAIGn.DE Chief Executive Dieter Zetsche said on Wednesday he personally did not see any risks from a Chinese purchase of Kuka, considering previous takeovers by Chinese buyers had not had any negative effects.

China’s Shanghai Electric 601727.SS has in the past also considered buying Kuka but shied away from making a move, two people said. Another banker said Swiss engineering group ABB ABBN.S could be interested in Kuka in principle but that the price is now too high.

Shanghai Electric was not immediately available for comment. ABB declined to comment.

Despite its concerns about losing German technology to China, the ruling coalition of Merkel’s conservatives and Gabriel’s Social Democrats (SPD) usually does not like to meddle in takeovers.

Additional reporting by Paul Carsten, John Miller, Markus Wacket and Georgina Prodhan; Writing by Paul Carrel; Editing by Madeline Chambers, Richard Balmforth and Alexandra Hudson

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