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"Corporate raiders" buy into troubled Unaxis

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Foreign “corporate raiders” have bought a key stake in Switzerland’s long-suffering Unaxis technology group – sparking fears of a possible full-scale takeover.

This content was published on February 14, 2005 - 16:35

Unaxis confirmed on Monday that the Austrian-based Victory investment group now holds nearly 12 per cent of voting rights – making it the second-largest shareholder.

The Anda-Bührle family, which founded the once-famous Oerlikon-Bührle defence group that gave birth to Unaxis, still holds a 21.1 per cent stake through its IHAG investment vehicle.

Mirko Kovats, one of two men behind the Victory investment group, told Switzerland’s Finanz und Wirtschaft financial newspaper that he could fully imagine increasing the stake in Unaxis.

Kovats, who is known for his role in the recent break-up and sale of Austria’s VA Tech to German conglomerate Siemens, gave little indication of his long-term plans for Unaxis.

He denied that he wanted to see a break-up of the company, but stressed that key production facilities in the loss-making semi-conductor division would have to be relocated outside Europe.

Some financial analysts say the company has lost so much value in recent years that more money could now be made by selling the various parts off individually.

Takeover?

Helvea analyst Reto Amstalden told swissinfo that it was difficult to tell whether the Austrian investors were interested in a full takeover, but said they would probably increase their current stake in the near future.

Ralph Burchert, an analyst at Erst Bank in Vienna, added that Kovats had a reputation as an aggressive investor, who would “likely not stop until he has operational control”.

Explaining the move, Kovats said Unaxis had been “sub-optimally” managed in recent years, resulting in considerable destruction of value.

“Other companies in the sector have double-digit EBIT (earnings before interest and tax)margins. Why should Unaxis be different?” he added.

Kovats said that he and his colleagues had a lot of experience in the field of corporate restructuring and were willing to put their know-how at the disposal of Unaxis.

“In my opinion, Kovats wants to accelerate change at the strategic, operational and financial levels,” Amstalden told swissinfo.

“His next initiative will probably be to try for a seat on the board of directors at the annual general meeting in April,” he added.

“When you look at the fundamentals, you see that, [for all its problems], the company has a lot of spare cash and shareholders would like to see more of that coming back to them.”

Question mark

He added that one big question mark concerned future relations between the Victory group and the Swiss IHAG investment group.

The main investors were likely to agree on operational changes, including plans to streamline the product portfolio and to relocate production facilities in the loss-making semi-conductor branch.

However, Amstalden said that IHAG had in the past proved unwilling to lose control over the group’s strategic direction.

If disagreements were to surface, the Austrian group might then look to further increase its stake in order to acquire full control over Unaxis.

Kovats says he has not yet spoken directly to IHAG.

Renowned history

Unaxis was formed in 2000 following the break-up of Switzerland’s Oerlikon-Bührle industrial and defence group.

Although still one of Switzerland’s technological heavyweights, the company has suffered severely in recent years from a combination of alleged management problems, ill-advised diversification and harsh market conditions.

The thin film and vacuum technology division remains profitable, but ongoing losses in the semi-conductor equipment division have led to major restructuring measures and the departure of chief executive Heinz Kundert last November.

Board chairman Willy Kissling also announced last month that he would not stand for re-election at the annual shareholders’ meeting in April.

The company has issued four profit warnings in the space of six months, and announced two weeks ago that it expected an operating loss of SFr370 million ($308 million) for 2004.

swissinfo, Chris Lewis in Zurich

Key facts

Unaxis was formed in 2000, following the sale of the arms division of the former Oerlikon-Bührle.
Other areas spun off include Bally (shoes) and Pilatus (aerospace).
Unaxis looks set to concentrate in future on its profitable thin wafer and vacuum technology division, at the expense of the loss-making semi-conductor equipment division.

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In brief

Unaxis has confirmed reports that an Austrian investment group has bought a 12 per cent stake in the company.

The Victory group denies that it wants to break Unaxis up for sale, but has indicated that it will increase its stake in the near future.

Analysts say the Austrians are likely to do so before the annual general meeting in April.

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