German groups Veba AG and Viag AG have agreed to an even board of directors split when they merge, according to a recent press report.
The heads of the two companies have agreed to divide the number …
German groups Veba AG and Viag AG have agreed to an even board of directors split when they merge, according to a recent press report. The heads of the two companies have agreed to divide the number of board seats equally despite Veba“s larger size, because Viag has better access to energy end-users, the report said. The stakes in the merged entity each company will hold still remain open, but there are “good chances that the 67-33 split can still be improved in Viag“s favour,” the report said. A Viag spokesman declined to discuss the report, saying “we don“t comment on speculative articles in the press.” No one at Veba was available. Veba and Viag have been in talks for several weeks regarding a merger that would create the largest energy company in Germany. Another German newspaper reported that Veba is offering the state of Bavaria 10% over the market price for its Viag stake. Bavaria is Viag“s largest shareholder and its stake is seen as one of the sticking points for a merger between the two companies. The newspaper said Bavaria may decide to maintain some of its 25.1% stake in Frankfurt-based Viag so it will continue to have a say in the management board“s future decisions about jobs and where operations are located. Veba“s supervisory board planned to meet to discuss the merger, and Viag“s supervisory board will meet on 26 September. One major sticking point in the discussions is the future of the companies“ telecommunications units. Veba“s mobile telephone company E-Plus will be sold, while Viag Interkom will remain in the merged company for around two years before it is listed on the stock exchange once it turns a profit in 2001, the report said. The planned merger, said to be valued at about US$ 15 billion, is expected to face regulatory scrutiny that could result in the companies being forced to divest some businesses. In addition to power generation, the combined companies would have interests in chemicals, telecommunications, silicon-wafer production, oil, real-estate management, aluminum, glass manufacturing and packaging. Veba and Viag are the second- and third-largest German energy companies, respectively, in sales terms. Together, they move into the top spot in the country, with combined sales of US$ 10.9 billion in 1998, but still trail Electricite de France, or EdF, which holds the No. 1 spot in Europe. EdF“s looming presence is seen as one of the drivers for regional industry consolidation, and the German government seems to be pushing for German energy companies to become major European players. Outside Germany, Viag has energy assets mainly in Hungary, while Veba recently took a stake in the Dutch market and has interests in the Nordic and Baltic regions.