“Start up again as soon as possible”

Munich OsramChief Olaf Berlien has spoken out for the shutdown to end as soon as possible. “It is clear that we cannot keep the stores and factories closed for three months,” he told the Handelsblatt. “We have to start up again as soon as possible.” The Federal Government has so far done an excellent job. But it also had to take into account the experiences of other countries. “The obligation to wear a mouthguard could help us.”

The Osram boss recommended the companies to prepare for the time after the corona crisis. “If you are ready when the market starts, you will gain market share in the long term,” he said. In a crisis, the strong become stronger and the weak become weaker. “There are some who are already shaking in terms of liquidity.”

The ex-Siemens subsidiary Osram is currently about to be taken over by AMS. The Austrian sensor specialist had difficulty in getting a capital increase through which the acquisition was partially financed.

The corona crisis had no impact on the takeover process itself, said Berlien. “If there are no sales every eight months, it will of course also have consequences for the two companies.” “Together we have a much better balanced portfolio.”

Read the complete interview here:

Mr. Berlien, have you ever experienced such a crisis?
I have experienced exceptional situations in my managerial career several times. It all started with the stock market crash in 1987 and the Asian crisis ten years later. The terrorist attacks in 2001 and the financial crisis, which had a massive impact on our economy after 2008, were also drastic. Especially the latter is now a déjà-vu for me.

But such a crisis, which affects the whole world at the same time, is new.
Fortunately, the situation is not like this. While the economy in Europe and North America is at a standstill, the wheel in Asia is already turning again. Our Chinese factories are 100 percent full, we cannot meet the demand. I need a crisis kit.

What’s in there
Every manager receives a checklist from us. There are topics like hiring freezes, checking outstanding invoices and shutting down temporary workers. He should also call the customer every day and ask what orders still exist. I know from the previous crises that the books can be full of orders, but they will no longer turn into sales.

So you were well prepared.
Due to the developments in China, we were warned and were able to prepare for the crisis early on. On March 6, we therefore concluded a “Group Pandemic Works Agreement” with the employees, in which we regulated the use of all the tools. We were early.

And is the agreement already being used?
We stopped work in six out of 26 factories worldwide. In Germany, we can compensate for the failures by reducing overtime accounts. We have not yet applied for short-time work here, but we are preparing for it in agreement with the employee representatives. It is important that we remain flexible.

This means?
In such crises there are the unreasonable who continue to work at full throttle, and there are the fearful who brake too early out of concern. The brave are prepared to step on the gas again at the right moment.

Not everyone will survive this crisis.
The companies that were previously not well positioned will tip over. Anyone who has done their homework properly will hold out longer. We have a 50 percent equity ratio, and we are well prepared for short-term crises.

Work continues in many of your factories. How do you protect your employees?
We rely on a whole range of measures. Consistent hygiene is a matter of course. In addition, we sometimes work in two strictly separate shifts in the factories – the workers don’t even meet in the parking lot. In between everything is disinfected.

What is the relationship with the car manufacturers like at the moment? Do they take their suppliers into consideration, or is everyone the next person?
We try to call everyone every day. The situation of the manufacturers is not easy: in Spain, France or Italy, no one goes to the dealership now. We try to coordinate. In the financial crisis in 2008, one or the other was even more selfish – since then everyone has learned. Now we are seeing that by the end of April we are ready to start up our plants.

Then is it that far?
Nobody can make a reliable forecast there, everyone drives on sight.

But you hope for a quick recovery?
The economy had recovered faster and faster in the last four major pandemics.

To do this, the restrictions must first be lifted. How do you assess the measures taken by the authorities so far? Must be opened quickly?
First of all: the safety of people has top priority. The federal government has to do everything it can to save lives, and it has done an excellent job so far. From today’s perspective, the measures are appropriate.

But?
The federal government should take into account the experience of other countries. For me, this includes wearing a face mask. Where this happens, the curve is flatter. Examples such as Japan and South Korea show that businesses can remain open with the default. The duty to wear a mouthguard could help us. It is clear, however, that we cannot keep the stores and factories closed for three months. We have to start up again as soon as possible.

When the shutdown ends, how quickly can you start up again? From one day to another?
No, it doesn’t help if we’re ready, but our suppliers don’t. I consider three to five days for a realistic period. The situation is similar in the auto industry. The longer the shutdown takes, the more difficult it will be to start up the car factories. Because some suppliers will then no longer be there.

For which parts do you expect bottlenecks?
For us, electronic parts are the critical components that must be available. Bottlenecks also arise at a very unexpected point. In Malaysia, we are allowed to continue producing with a small number of employees because we are considered a systemically important supplier to the automotive industry. We currently have the problem that cardboard boxes are missing – their manufacturers are not considered systemically important and are therefore leakproof.

How do you steer through the crisis? Is there a task force?
I am the top crisis manager. Of course, we also have a task force that discusses the situation on a daily basis. But the CEO has to be the driver. It is important that there is clear leadership in the crisis.

How will the crisis change your industry? Do Asian competitors have an advantage because the economy is already starting up again?
Osram is the market leader in China, so we have no disadvantage there. However, the old rule applies to everyone: in the crisis, the strong become stronger and the weak become weaker. There are some that are already shaking in terms of liquidity.

And the strong ones?
If you are ready at the moment the market starts, you will gain market share sustainably. I swear by my sales team now. You have to be prepared for the “Day after Corona”.

Osram is just being taken over by the Austrian sensor specialist AMS. What are the effects of the corona crisis?
It has no impact on the takeover process itself. If no sales are made every eight months, it will of course also have consequences for the two companies.

Don’t you see the chance to get rid of a new owner who might not be loved yet?
No, there was an offer to our shareholders, and they accepted it. Incidentally, we are better positioned together: AMS is strong in cell phones, so Osram always wanted to go there. We are good in the auto industry, so AMS wanted to get in there. Together we have a much better balanced portfolio.
Thank you for the interview.

More: Zero hour – how a responsible restart of the economy succeeds

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AMS is confident about a billion dollar capital increase

Dusseldorf The time for a capital increase worth billions could hardly be more unfavorable: The Austrian sensor specialist AMS wants to collect more than 1.6 billion euros to partially finance the takeover of the much larger competitor Osram.

In addition to the financial investor Temasek, who holds more than five percent of the shares, other important AMS investors also wanted to participate in the capital increase, the Handelsblatt learned from the AMS environment. According to industry circles, there are also hedge funds that could secure additional shares.

The deadline for the capital increase expires on Monday. In the past weeks there had been doubts as to whether the new shares could be placed with investors at all. AMS had already had to make big concessions on the price anyway; the new shares will be offered at a price of CHF 9.20.

For comparison: in autumn the AMS rate was CHF 32. In order to collect the desired amount, AMS had to offer 190 million shares. The AMS share price had temporarily dropped below CHF 9.20 in recent weeks. It was just above it at the end of last week.

The capital increase is made by the banks HSBC and UBS such as Deutsche Bank, Erste Group and others. If there were not enough interested parties for the new shares, the financial institutions would have to add the shares to their books.

AMS is relaxed

If the banks remain on too many shares, they may even have to make a takeover offer to the other shareholders. However, the capital increase could still be stopped due to a “change in the financial markets, an accident or a crisis” – as stated in a clause in the prospectus.

In the AMS environment, you are relaxed. There is definitely interest in new shares – even if nobody currently wants to quantify how high it is. If shares ended up with the banks, they could sell them later – possibly at a profit – it said. In addition, AMS has secure bridge financing with which the Osram shares could also be financed without a capital increase.

AMS had offered more than four billion euros for Osram. The Austrians already bought more than 20 percent of the shares on the stock exchange and secured the majority with the offer of EUR 41 per share, which has not yet been completed.

In German industrial circles, many feel confirmed in the face of the problems facing Austrians. “The capital increase is completely on the ropes,” says one from the Osram area. It is quite possible that a large part of the new shares will end up with the banks.

It is risky to rely on bridge financing. Because then the new group would push even higher debts. In view of the emerging economic crisis, AMS should find it difficult to reduce the mountain of debt as soon as promised.

It remains to be seen what will happen if the AMS financing model shakes and the pressure from the banks increases. “The only way out is actually that someone buys the Osram shares from them,” says German industry circles. After all, there are still financial investors who are basically interested in Osram. For example, the financial investors Bain and Advent had long bid for the ex-Siemens subsidiary, but were eventually cut out by AMS.

Strategic takeover still makes sense

In view of the unclear situation and the corona crisis, the Osram share price had fallen from 45 to temporarily 26 euros in recent weeks. When AMS confirmed its expectation to complete the acquisition in the second quarter last week, the price skyrocketed. At the end of the week it was around 32 euros.

Many investors were and are convinced of the strategic sense of the takeover of Osram from the AMS perspective. The Austrians solve two problems with it. In a consolidating market, they alone had a difficult position as a small to medium-sized player.

With the takeover, AMS can also be dependent on major customers Apple reduce. AMS is doing good business with the mobile phone manufacturer – however, a theoretically conceivable listing would be difficult for AMS.

More: Osram cashes the annual forecast due to the corona crisis

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AMS maintains takeover of Osram

Osram

Flags with the Osram logo: The sensor specialist AMS is sticking to its takeover plan.


(Photo: dpa)

Munich The Austrian sensor specialist AMS does not want to be put off by the takeover of Osram due to the rapid fall in the price of its shares. AMS made it clear on Thursday evening that the company is confident that it will be able to accommodate the 1.65 billion euro capital increase to finance the takeover of the Munich lighting group with shareholders and other investors.

“AMS has been in constant contact with investors since the rights issue began and has received positive feedback from a number of major shareholders who plan to exercise their rights and from other investors wishing to participate in the rights issue,” the company said.

Since the start of the subscription period on the Swiss stock exchange, the AMS shares fell in the wake of the corona crisis by two-thirds to temporarily less than the CHF 9.20 that the new shares were to cost. This made it unattractive for AMS shareholders to exercise their subscription rights for the new papers. On Thursday, AMS closed at CHF 9.28.

The risk of the capital increase failing had raised doubts on the capital market itself about the € 4.6 billion takeover itself. Investment banks guarantee the issue and would have to put unsold shares on their own books. However, you have the right to back out in the event of extreme market turmoil.

AMS CEO Alexander Everke tried to dispel the doubts: “We are more than ever convinced of the obvious strategic logic and the value creation potential from the merger of AMS and Osram.”

Osram announces short-time work in many plants

Under the impression of the virus outbreak, Osram tipped its forecast for the current financial year on Wednesday and announced short-time work in many plants. “We continue to receive positive feedback from our shareholders regarding this strategic logic and the capital increase,” emphasized Everke. He was confident that the takeover would be completed by the end of June at the latest once the remaining approvals from the antitrust authorities have been received.

More: Osram is collecting the annual forecast due to the corona crisis.

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Osram cashes the annual forecast due to the corona crisis

Osram headquarters in Munich

Munich The lighting company Osram has cashed in on his forecast for the current fiscal year 2019/20 (September 30) due to the corona crisis. The corporate goals could probably not be achieved, Osram announced on Wednesday evening.

The pandemic and countermeasures – particularly the increasing number of shutdowns by Osram’s customers and disruptions in global logistics chains – had a major impact on the global economy and the global automotive industry, Osram argued. The Osram chip division and the automotive business would suffer as a result. These represent around 50 percent of the sales of the ex-Siemens subsidiary.

Osram announced a month ago that sales would decrease by up to three percent or increase by up to three percent. Adjusted operating return on sales will be between nine and eleven percent. This forecast is no longer valid. Osram had issued several profit warnings in recent years.

The Munich group announced further austerity measures. So one takes short-time working into consideration. The temporary closure of own production facilities is also conceivable. Osram is currently about to be taken over by sensor technology specialist AMS. However, the Austrians have difficulties with the financing after a fall in their share price: The takeover is to be financed in part with the help of a capital increase, which should bring 1.65 billion euros. In financial circles it is now doubted that this can still be placed.

AMS was confident on Wednesday. “We are still as convinced of the takeover of Osram as we were at the beginning of the year and are working towards closing, and we are on track,” said a group spokeswoman for the Handelsblatt. The November takeover bid and financing remained secured. In industrial circles it was also emphasized that the Austrians had secure bridge financing. In any case, this enables them to pay the bid even without a capital increase.

AMS already holds a good 23 percent of the shares. With its takeover offer of EUR 41 per share, the group also secured a majority. The purchase has not yet been completed.

The group, based in the Styrian town of Premstätten, produces chips and sensors. The most important customer is the cell phone manufacturer Apple, which represents a large part of the turnover. Apple has been suffering from the consequences of the global corona crisis for weeks. AMS is currently only valued at around EUR 750 million on the stock exchange. The share had lost around two thirds of its value within a month.

More: Fall in price at AMS raises doubts about capital increase for Osram purchase

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Ingo Bank changes to majority shareholder AMS

Ingo Bank

Ingo Bank’s appointment to the AMS Board of Directors is, according to Peter Bauer, Chairman of the Osram Supervisory Board, “an important step for the future merging of the two companies”.

(Photo: AFP)

Munich Osram CFO Ingo Bank changes to the new majority shareholder AMS after the sale of the Munich lighting technology group. The 51-year-old will succeed Michael Wachsler-Markowitsch, who has held the office since 2003, as AMS announced on Friday in Premstätten near Graz.

Wachsler-Markowitsch is to be admitted to the AMS Supervisory Board after a waiting period of two years. Until then, he would work as a consultant for the sensor specialist. “Manager Magazin” had already reported on the upcoming Banks change.

Bank, who has spent most of his professional life at the Dutch Philips group, has been a member of the Osram Executive Board since September 2016. He initially takes on the post at AMS for three years. “The appointment of Ingo Bank to the AMS board is an important step in the future integration of the two companies and ensures continuity in management,” Osram supervisory board chairman Peter Bauer welcomed the appointment. Banks position at Osram temporarily takes over CEO Olaf Berlien, as the traditional company announced.

In the merger agreement, AMS had promised to appoint an Osram manager to its own board and to let a board work from Munich. The Austrians hold almost 60 percent of Osram, but are still waiting for the approval of most antitrust authorities for the 4.6 billion euro takeover, which had been preceded by a tug of war for months.

AMS confirmed its forecasts for the current first quarter. The corona virus crisis did not change expectations, the company said. As planned, sales will be between $ 480 and 520 million, and the adjusted operating return on sales (EBIT margin) will be between 19 and 21 percent. The AMS share has lost more than a quarter of its value since the beginning of the year; on Friday alone, it lost 4.7 percent on the Swiss stock exchange to CHF 29.01.

More: A basis of trust between AMS and Osram has not yet been created, says Axel Höpner.

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Statements about the digital division make mistrust grow

Munich The distrust between that OsramGroup and the future Austrian owner AMS is growing. Above all, the suggestion by AMS CFO Michael Wachsler-Markowitsch that he wants to divest Osram’s digital division is causing criticism in Munich: “We will not leave this alone and address this in the company’s corporate bodies,” said Osram’s supervisory board -Vize Klaus Abel the Handelsblatt.

AMS had violated the agreement to jointly review the portfolio open to results. “That does not create trust between the two companies.” The employee representatives from IG Metall now want to involve, among other things, the monitor Brigitte Ederer, who should mediate in the event of a conflict.

AMS is about to take over the significantly larger Osram Group. The sensor specialist already owns almost 20 percent of the shares and has secured a further 40 percent with a takeover offer. Since the acquisition is not expected to fail due to cartel concerns, the takeover should be completed in the next few months.

The Osram leadership initially resisted the takeover. But after the conclusion of an investor agreement, Osram boss Olaf Berlien switched to cooperation. But the dispute over the portfolio now shows how great the distrust in Munich is still that the Austrians could not keep their promises.

In the beginning, AMS had declared that it wanted to part or all of the Osram digital division. The latest offer document then said that they were ready to “review and evaluate” these plans together with Osram. In Munich it was emphasized that this means an open-ended examination.

Deficit digital division

The digital division is a deficient smorgasbord. A large part is in the traditional business with electronic ballasts for luminaires – these activities would also be available for an independent Osram. The portfolio also includes, for example, the US company Fluence, which sees itself as the world’s leading provider of intelligent plant lighting. This is used, for example, in the cultivation of vegetables or in the USA for the cultivation of cannabis for medical purposes.

AMS now anticipated the joint review. “Osram’s digital business doesn’t really fit with AMS, we’re looking for a better home for it,” said Wachsler-Markowitsch. Such an announcement, even before the takeover is even completed, was seen by some in Munich as an affront. Osram boss Berlien diplomatically described Wachsler-Markowitsch’s statement as “individual opinion”.

Vice-chairman Abel believes that the Austrians have always intended to separate from the digital division: “And this is still their plan.” Once the domination and profit transfer agreement has been decided, AMS can be expected to implement this plan – yes because the heavily indebted corporation needs the money. IG Metall will also approach the AMS leadership, its supervisory board and monitor Ederer and “require compliance and implementation of the assurances given”.

Osram boss campaigns for merger despite differences

Osram CEO Berlien promoted the merger at the Annual General Meeting a few days ago despite the dissonance. The lighting specialist has seldom been truly independent in its more than 100-year history. At times the company belonged to AEG, General Electric and Siemens, The Osram brand will also be retained, said Berlien. “The factories in Germany have a location guarantee.” The merger with AMS offers Osram “a real perspective, a long-term future”.

But the statements of Wachsler-Markowitsch have caused distrust to grow among some at Osram. Officially, it was said on Monday that “there is great confidence that all parties will adhere to the jointly negotiated investor agreement”. The company did not want to comment on a report by “Manager Magazin”, according to which Osram CFO Ingo Bank could become CFO of AMS.

At the Annual General Meeting, Berlien emphasized that the industrial logic behind the merger was correct. Both companies could reduce their dependence on individual markets – Osram on the automotive business, AMS on the mobile communications market. Because both companies are currently facing challenges: Osram is suffering from the weakness of the global automotive markets. The Austrians, on the other hand, are strong on the major customers Apple dependent – and that has to struggle in China because of the corona virus.

Together, you could offer completely new products, said Berlien: “AMS is expanding Osram’s strong LED expertise with its expertise in the areas of sensors, software and system design.” However, it will be crucial whether the integration succeeds. “A merger of this size is a mammoth task.” The dispute over the portfolio shows how difficult the path will be.

More: Osram tightened its austerity measures before the takeover by AMS.

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