A group of US private equity firms could be thwarted in their attempts to acquire MTU Aero Engines, the aerospace division of German car manufacturer DaimlerChrysler.
US buyout firms The Carlyle Group, Blackstone Group and Kohlberg Kravis Roberts are all separately thought to be in advanced talks with DaimlerChrysler over the MTU unit, which is thought to be valued at between E1.5bn and E1.8bn. UK private equity firm Doughty Hanson is also thought to be interested in bidding for the unit.
However, German Chancellor Gerhard Schroder has expressed his concern at the prospect of the business being sold to a US financial buyer. Reuters quotes the German Chancellor as saying: “Germany has an interest in keeping our capacities in defence technology – highly specialised in many areas – in Germany rather than having others control it.”
Last week, Economy and Labour Minister Wolfgang Clement revealed that the government plans to pass legislation giving it the right to review foreign investors’ purchases of German defence and armament sector firms.
Opposition to the DaimlerChrysler unit sale is thought to stem from the sale last year of HDW, the German manufacturer of submarines, which was sold to US private equity house One Equity Partners. One Equity has since revealed that it plans to sell the business, with German engineering group ThyssenKrupp thought to be among the interested parties. One Equity paid around E600m for a 75 per cent stake in HDW last March.
MTU is one of the few remaining businesses outside of DaimlerChrysler’s car and truck core operations. Based in Munich, MTU reported E2.2bn in sales in 2002 and employs more than 8,000 people. DaimlerChrysler had planned to choose a final bidder for the business by this month, subject to the group’s asking price being met.
German newspaper Berliner Zeitung reports that government officials have scheduled a meeting with DaimlerChrysler management board member Manfred Bischoff on Monday to discuss the sale.