Russian billionaire increases slice of Sulzer

Viktor Vekselberg considers Sulzer an "industrial pearl" Sulzer

Speculation about Swiss engineering firm Sulzer intensified after Russian investment group Renova took sole charge of nearly a third of Sulzer's shares on Tuesday.

Renova gained sole ownership of the 31.4 per cent majority Sulzer stake after Austrian private equity firm Victory pulled out of their jointly owned consortium Everest.

Sulzer responded by calling for constructive talks with Renova owner, the Russian billionaire Viktor Vekselberg. “Sulzer would like to remain independent,” said spokeswomen Verena Gölkel.

Renova’s stake in Sulzer is made up of 17.5 per cent in shares and 13.9 per cent of call options – contracts that can be redeemed for shares.

If Renova were to increase its stake in Sulzer to a third, it would trigger an automatic takeover bid under Swiss market rules. Vekselberg has stated his ambition of adding to his Swiss portfolio, but he has always maintained that his stake in Sulzer is strategic rather than a springboard for a full takeover bid.

Both Renova and Victory have caused shock waves in Switzerland’s engineering industry after embarking on a shopping spree of household Swiss company names including Unaxis, now renamed Oerlikon, and Saurer.

Having started their forays into Switzerland as separate entities, they later joined forces by creating Everest, each holding an equal share of the company. However, Victory has now pulled out of the joint venture leaving Renova holding all the Sulzer shares Everest acquired in April.

Their method of acquiring large stakes in these companies by stealth also prompted a revision of market regulations in Switzerland that came into force on July 1.

Rebuff

The news came on the day that Sulzer announced a 26 per cent rise in net profits to SFr131.8 million ($110 million) for the first half of 2007 compared with the same period last year.

Sulzer, which makes pumps for the oil and gas sectors and surface coatings for jet engines, put the increase down to high oil prices fuelling demand for their products.

Sulzer had a $2.2 billion (SFr2.7 billion) bid for British firm Bodycote and a further takeover attempt for parts of pump maker Weir Group rebuffed earlier this year.

Victory in the meantime has denied speculation that it sold its Everest stake because it was in financial difficulties. The investment group also has minority stakes in Swiss telecommunications company Ascom and engineering groups Rieter and Georg Fischer.

It also owns Saurer and Oerlikon, in which Renova also has a 14 per cent stake.

swissinfo with agencies

In brief

Sulzer is active in machinery and equipment manufacturing as well as surface engineering.

It has a total workforce of about 10,400 in 120 locations around the world, including 1,200 in Switzerland.

Its core divisions are leading suppliers of the oil, gas, power generation as well as car and aerospace industries.

The company was founded in 1834 and its headquarters are in Winterthur, outside Zurich.

Business figures (2006):
Net profit – SFr221.4 million.
Sales – SFr2,801.7 million.

Swiss industrial sector

There are an estimated one million people working in Switzerland’s industrial sector.

About 300,000 people work for engineering and machinery companies, including Sulzer.

The sector is made up mainly of small- and medium sized enterprises, but also some world leaders.

It accounts for about 40% of Swiss exports.