Merckle suicide tragedy sparks HeidelbergCement collapse

Merckle suicide tragedy sparks HeidelbergCement collapse
Published: 06 January 2009

German billionaire Adolf Merckle has reportedly killed himself, as his business empire crumbled under a growing burden of debt, his family says. Merckle, 74, was hit by a train near his hometown of Blaubeuren, southeast of Stuttgart, yesterday evening, Die Welt newspaper reported. Merckle, whose holding company owes banks about 5 billion Euros, owned stakes in HeidelbergCement AG and drug wholesaler Phoenix Pharmahandel AG.

Merckle, whose estimated US$9.2bn fortune put him 94th on Forbes’ list of the world’s richest people, had been hurt by bets on Volkswagen AG, a drop in the value of HeidelbergCement stock and increasing debt. He had been seeking emergency financing for more than two months from a group of more than 30 banks led by Commerzbank AG, Deutsche Bank AG, Royal Bank of Scotland Group Plc and Landesbank Baden-Wuerttemberg.

The billionaire Merckle family’s HeidelbergCement AG dropped the most in six weeks in Frankfurt trading after the suicide of Adolf Merckle and increased the likelihood the company will be sold to creditors. The building-materials supplier slid as much as 13 per cent to 29.16 Euros. Merckle also owns stakes in drug wholesaler Phoenix Pharmahandel AG and generic drugmaker Ratiopharm GmbH.

“It remains to be seen whether the shareholding goes to the banks or stays with the family, albeit the latter seems more difficult now,” said Tobias Woerner, an analyst at MF Global Securities, referring to HeidelbergCement. “The banks have been in the sector before, and may take it on and wait for a recovery. Given the high level of debt we may see a piecemeal breakup of the company.”

HeidelbergCement traded at 31.4 Euros as of 4:50 p.m. local time, a decline of 5.8 percent or 1.93 Euros. Today’s drop left the cement maker with a market value of less than 4 billion Euros. He used loans to the family’s Spohn Cement GmbH investment unit in 2005 to gain control of HeidelbergCement.