ALEXANDER CAMPBELL / LONDON
German bill still under consideration as aeroengine builder's owner talks to investors
A law aimed at blocking the sale of German aeroengine builder MTU to a foreign bidder has run into more delays, while MTU owner DaimlerChrysler is deadlocked with bidders over price.
DaimlerChrysler says only that it is "continuing to seek a European solution...we are negotiating with five investors, but there is no time pressure". But US investment company Carlyle Group, one of the bidders, says that "nothing is happening - we are just waiting for DaimlerChrysler to make a decision on the pricing of the sale".
The other bidders are believed to be equity houses - Doughty Hanson of the UK and Kohlberg Kravis & Roberts, Blackstone and a third unnamed bidder from the USA. Given DaimlerChrysler's expressed preference for a European owner, Carlyle would seem favourite, as it already co-owns Italy's Avio with Finmeccanica, and may team with Finmeccanica again to bid for MTU, according to comments last month by Finmeccanica chief executive Pierfrancesco Guarguaglini.
If Carlyle adds MTU to its portfolio, industry insiders speculate that its next target could be the smaller Spanish manufacturer Industria de Turbo Propulsores (ITP), a partner with MTU and Avio in the Eurojet group, responsible for the EJ200 engine for the Eurofighter Typhoon.
The move would give Carlyle 67% of Eurojet, and create a new European engine company rivalling Snecma in size, with 2002 combined sales of $3.9 billion, compared to Snecma's $4.11 billion. It would also draw Carlyle closer to Rolls-Royce, which owns 47% of ITP and, separately, 33% of Eurojet. However, taking on ITP would require the Spanish government to approve its sale, which is by no means certain. The prospect of US control of the Eurojet project could also alarm the European Commission, which would have to approve further takeovers.
The German economics ministry says the bill on foreign ownership of defence companies "is still in discussion", with the German foreign and interior ministries and the secret service involved. A draft version of the bill will not reach the cabinet before "the middle or the end of October", the ministry adds.
This is the second slippage in the timetable of a law originally intended to reach the cabinet by the end of August, and means that parliament is unlikely to pass the bill - if at all - before early 2004.GE chief executive Jeffrey Immelt told French media last week that Snecma was "strategically important" to GE's aero engine business, and that GE could take a stake in the French company if it were privatised.
Source: Flight International