board fight Bilfinger Board Splits Over Sale Plans

A row has broken out among board members of ailing engineering giant Bilfinger over its decision to consider selling off one of its most profitable divisions, with some arguing it goes against the firm's agreed strategy.
Bilfinger is thinking of selling off some of its constituent parts.

A dispute has erupted at troubled German engineering and services group Bilfinger over its recently announced plans to sell its building and facility division.

Stephan Brückner, head of the group works council and deputy chairman of the supervisory board at Bilfinger, is opposing the planned sale.

He claims it does not form part of a two-pronged strategy that the board signed off on last year to get the ailing giant back on track, and which is backed by employees.

"The only thing I am aware of at present is the two-pillar strategy, I don't know of any other strategy,” he said.

The group's management unexpectedly announced two weeks ago that a sale was being discussed and that offers had been received. But Mr. Brückner told business magazine WirtschaftsWoche that employee representatives on the group's supervisory board were given details in mid-October of Bilfinger's new two-pillar strategy.

A sale of the FM and construction activities was not discussed at a supervisory board meeting on December 16.

It was the result of a comprehensive analysis of the company, which employs around 70,000 staff worldwide, and was supposed to provide the group with guidance. It focuses on the areas of facilities management and construction and industrial services.

Under the plans, only the energy services division of the Mannheim-based group was originally slated to be sold. A sale of the FM and construction activities was not discussed at a supervisory board meeting on December 16, Mr. Brückner said. He added that it was therefore "of no interest to the employee representatives on the supervisory board" whether Bilfinger boss Per Utnegaard has received high offers for the facilities management division.

Mr. Brückner is also unimpressed at the possibility of a special dividend from the proceeds of the sale, about a quarter of which would go to international investment company Cevian, which owns a stake in Bilfinger. He says that this would not do anything to protect jobs: "I don't see how a special dividend will get the company anywhere. If we sell building and facility now, we need to have an idea about what we will do with the proceeds in the company."

Mr. Brückner, who is usually very reserved in public, appears to be distancing himself from Mr. Utnegaard and the supervisory board members appointed by Cevian, Jens Tischendorf and Eckhard Cordes. The latter is chairman of the board. Mr. Utnegaard had presented the two-pillar strategy to the public and to staff in October with Cevian's blessing. Mr. Brückner is now insisting that this concept should be maintained, saying that from the employees' point of view it is the best option to prevent the Bilfinger group being broken up completely.

According to information provided to WirtschaftsWoche, the main contender to buy the building and facility division is U.S. private equity firm KKR. The firm's London branch was said to have been one of the first potential investors to contact Bilfinger last year. There are also expected to be other bidders in the private equity sector that are urgently seeking good investment targets.

 

 

French construction giant Vinci, which has plenty of funds to invest, is also reported to be seriously interested. The only question is whether Otto Kajetan Weixler, head of Bilfinger's FM business, would agree to work under French leadership. If the division were taken over without its chief, this would weaken the investment and would be certain to fuel skepticism within the division.

Meanwhile, Swiss plant construction and facilities management group Cofely, which is owned by French utilities giant Engie, formerly GDF Suez, is another potential buyer. The group wants to scale back its investments following the drop in oil and gas prices, but an investment in the stable facilities management business could actually fit in well with this strategy. U.S. real estate service providers JLL and CBRE are also reported to be interested, although neither is thought to be a likely candidate.

Bilfinger has been plunged into an existential crisis since Germany’s transition to renewable energies took away the basis for its power plant services business, and its industrial services division was simultaneously hit by the slump in oil and gas prices. Only the facilities management and construction division is currently operating successfully at Bilfinger.

Quelle: dpa
Per Utnegaard only became chief of Bilfinger last year.
(Source: dpa)

 

Shares in the group, once one of the best performers on Germany's mid-cap MDAX index, plummeted from over €90 ($98) to temporary lows of about €30. They have since regained some ground and have risen to around €40 since Mr. Utnegaard, a Norwegian, took over the management of Bilfinger on Cevian's behalf in mid-2015.

The firm announced in mid-January that the facilities management and construction division might be sold, thereby turning its back on the two-pillar strategy and increasing uncertainty at the Mannheim-based firm.

Mr. Brückner is now awaiting clarification of the decision at an extraordinary meeting of the supervisory board.

 

This article originally appeared in the business magazine WirtschaftsWoche. To contact the author: [email protected]