German company Heraeus, the world“s second biggest maker of high-purity glass for optical fibres, is spinning off this part of its business as a prelude to a possible stock market listing of the unit…
German company Heraeus, the world“s second biggest maker of high-purity glass for optical fibres, is spinning off this part of its business as a prelude to a possible stock market listing of the unit in a few years“ time. Heraeus“s plans are another sign that private German companies in engineering-related fields are increasingly tapping the capital markets as a way of funding new developments. THis move is intended to give the family-controlled company options to raise, from external shareholders, the several hundreds of millions of euros per year, which it could require later this decade to step up investments in glassmaking capacity. The company expects it will need to do this to meet rising demand for optical fibres being used extensively in new high-capacity telecommunications networks. To pave the way for a possible public offering of its fibre-optic glass division, Heraeus is organizing its activities in this field at a separate company, to be called Heraeus Tenevo. Roughly 20% of the stake in the unit will be owned by a new group of private shareholders from outside the company, with the remainder held by Heraeus“s existing family shareholders. Horst Heidsieck, Heraeus chief executive, refused to say who these new shareholders would be and how much they would be paying for their stake. “They are shareholders we have been talking to, who are friendly towards the family,” he said. The company“s fibre-optic division makes extremely high-quality glass, which is essential in fibre optics to ensure that signals do not degrade as they pass along the cable. The division had sales last year of more than Euro 200 million (US$ 177.6 million). It is the world“s second biggest maker of such high-purity glass for fibre-optics, after Corning of the US, and supplies several telecommunications equipment and fibre makers such as Lucent of the US and Pirelli of Italy. Heraeus had total sales last year of Euro 8.2 billion, including activities in metals trading, medical equipment, dentistry, lamps and sensors. It is owned by more than 100 members of the Heraeus family, descendants of the chemist who set it up in 1851. Heraeus is planning to spend Euro 380 million in the next three years stepping up output of fibre-quality glass in its plants in Germany and the US. It has spent a similar amount on these investments in the past 10 years, with the money coming mainly from cashflow.