Hochtief calls for union head to step down after ACS commitments

By Helen Wright30 December 2010

The tense takeover struggle between Spanish contractor ACS and German construction group Hochtief has escalated after Klaus Wiesehuegel, head of the German trade union IG Bau, agreed to cooperate with ACS on key issues once it achieves majority control of its reluctant target.

Mr Wiesehuegel's decision to sign a set of key commitments to Actividades de Construcción y Servicios (ACS), despite Hochtief's fierce opposition to the takeover bid, prompted head of the works council at Hochtief Siegfried Mueller to call for his resignation from the Hochtief supervisory board.

Mr Mueller told CE, "[Hochtief] is anxious about being taken over by ACS and we were astonished and annoyed by Mr Wiesehuegel's actions. While I don't think that his intention was bad, Mr Wiesehuegel made these agreements with ACS without any discussion with his colleagues on the Hochtief supervisory board".

A spokesperson from German construction workers union IG Bau was unavailable for comment.

On 22 December, IG Bau set out nine key terms of commitment it had obtained from ACS, including that the Hochtief headquarters would remain in Essen after the takeover was complete, that the management board of Hochtief would remain in control of the company's operational business and an agreement on Hochtief's growth strategy going forwards.

"Having obtained the above mentioned commitments from ACS, IG Bau is convinced that this now allows for a constructive relationship between Hochtief, its employees and ACS," the agreement stated.

The Hochtief works council reacted by sending round an internal e-mail calling for Mr Wiesehuegel to step down and for a legal review into the agreements.

ACS said on 29 December - the day the initial tender period for its sweetened offer to Hochtief shareholders closed - that it held a 29,4% stake in Hochtief. The Spanish builder is widely anticipated to breach the key 30% threshold that would allow it to then buy up Hochtief shares on the open market.

In September, ACS launched its all-share offer for Hochtief, explaining that it actually aimed only to increase its stake to slightly above 50% so that it could consolidate Hochtief on its balance sheet, but still leave a substantial free float.

Despite rejecting ACS's initial offer and a second, sweetened proposal, Hochtief appears to be preparing to lose its battle against the hostile bid. On 29 December, chief financial officer Burkhard Lohr said the company had struck a deal with its creditors to allow for the change in control.

Hochtief's lenders have waived their right to cancel credit lines should any shareholder hold more than 30% - a decision which paves the way for ACS, which is heavily in debt, to become the majority shareholder.

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