Mergers: A German Solution

MERGERS A German SolutionFor ’20 years, Europe has been a good shopping ground for wealthy and resourceful U.S. corporations seeking to acquire other firms. This month one such U.S. corporation bent on buying out a German company was thwarted by a remarkable emergence of national feeling. Cologne’s Klockner-Humboldt-Deutz, producer of tractors, diesels and trucks, triumphed over the U.S.’s Inter national Harvester for control of Maschinenfabrik Fahr, manufacturer of West German farm equipment.

Klockner already had control of 32% of Fahr’s stock when, in December, it learned that International Harvester, which last year had sales of $2.5 bil lion, had hinted it might offer Fahr up to $100 for shares valued at $15 on the market. With sales of $335 million, Klockner could hardly match the Chicago company’s bid. But neither Klock ner nor the 500 members of the Fahr family and their 4,000 employees wanted an American owner to take over the 98-year-old company. They remembered only too well what happened to Heinrich Lanz AG, which in 1956, at age 97, was bought out by the U.S.’s Deere & Co. Deere replaced the German management, struck the Lanz name from products, disregarded the labor union — and has almost consistently lost money on Lanz.

To the delight of their countrymen, the Fahr family agreed on what newspapers proudly trumpeted to be a “German solution.” Rejecting International Harvester’s generous bid, Fahr accepted Klockner’s offer of about $60 a share for enough stock to give it 51% control of the company.