Sulzer shares suspended while AGM underway

René Braginsky (right) is trying to persuade Sulzer shareholders to throw out chairman, Leonardo Vannotti swissinfo.ch

Shares in Sulzer were suspended from trading on the Swiss bourse on Thursday as shareholders met to decide on the future of the industrial group. They are considering a hostile takeover bid from Swiss corporate raider, René Braginsky.

Shareholders are set to decide on the 167-year-old company’s fate, voting to either support current management or cast their lot with Braginsky’s InCentive Capital group, which has mounted the hostile bid worth $1.5 billion ($878 million) for Sulzer’s traditional engineering operations.

InCentive wants to replace the present board with its own team of directors, led by Eberhard von Koerber, a former ABB executive. Braginsky also wants to abolish Sulzer’s voting and share transfer restrictions. These have so far protected the 167-year-old company from hostile takeovers.

If the present board is voted out of office at the meeting in Winterthur, Braginsky will have succeeded where other Swiss corporate raiders have failed – Tito Tettamanti and Werner K. Rey both staged unsuccessful bids for Sulzer in the 1980s.

Sulzer has urged shareholders to reject InCentive’s offer and vote against the attempt to seek control of the board. It argues that the bid significantly undervalues the industrial businesses and offers no clear strategy.

It has also warned that if InCentive gains control of the board, the Zug-based company could withdraw its bid and would thereby take over Sulzer for next to nothing.

Braginsky has accused Sulzer’s management of years of failure, pointing the finger at an indecisive company strategy and poor earnings. He adds that his takeover bid is designed to rescue what can be rescued.

The biggest hurdle for Braginsky and his Zug-based company, according to analysts, is finding the necessary two-thirds majority to abolish the current voting restrictions.

The battle is made even more complex by the fact that both sides say they plan to spin off Sulzer Medica – the group’s medical division.

Sulzer Medica is faced with lawsuits in the United States for allegedly failing to warn thousands of patients about the dangers of a faulty hip replacement implant.

Hundreds of patients are suing Sulzer Medica’s US arm, Sulzer Orthopedics, and at least two class-action lawsuits have been brought against the company.

swissinfo with agencies