Dhe confirmation of the sale of Viessmann to the American group Carrier was only a few hours old when Carrier CEO David Gitlin tried to calm the tense mood of distrust, ignorance and speculation. On a conference call, he spoke of a “great day for us”. The heating company Viessmann “fits us like a glove” and is “Europe’s leading company in the most attractive market in our industry”. Gitlin issued ambitious growth targets for the acquired Viessmann business. Sales are forecast to be EUR 4 billion this year, EUR 5 billion in 2025, and double-digit growth on average by 2030. There were extensive location guarantees for Viessmann, and there should not be any layoffs for years to come.
Carrier expects synergies worth €200 million from the merger, with Gitlin trying to allay fears it could involve downsizing. 85 percent of the synergies should be achieved through savings in purchasing. “It’s not about downsizing. The transaction began a year ago with a dinner with Max Viessmann, CEO and son of Martin Viessmann, and since then there have been 15 more dinners before the deal was finalized. “We come to Germany to invest,” said the carrier boss.
The deal is expected to close by the end of the year
Carrier pays 12 billion euros for the Viessmann division with around 11,000 employees. 20 percent are to go to the remaining Viessmann Group as a block of shares, which will then become a major Carrier shareholder. The deal is expected to be completed by the end of the year. In global competition, only size and quantity count. The merger will create a “fast-growing innovation leader in a highly competitive market,” said Max Viessmann, who will have a seat on the Carrier board of directors. He said in a video statement Wednesday that his company lacks the resources and scale to compete with companies that calculate in millions of heat pump units, not thousands.
Image: FAZ
The Federal Minister of Economics also tried to calm things down. Robert Habeck (Greens) announced that he would take a close look at the business. “We will look at the project as part of the planned test steps and are in talks with the seller and the investor so that the project serves our economy and Germany as a business location,” he said. The advantages of the German energy policy and the profits that would be made with it should benefit Germany.
Other large German companies in the industry are relaxed. There is no indication that this individual decision could become a trend. “We are of the opinion that we can successfully manage the transformation on our own,” said a spokesman for Vaillant, which is also a family company and can best be compared with Viessmann in terms of size and positioning. “We see no reason to change our strategy.” In September 2022, Vaillant received a loan of 120 million euros from the European Investment Bank.
Rare but not unprecedented case
Viessmann also assured that other financing options – a loan, a partial sale to an investor, the takeover of a competitor – had been considered. A complete sale was also up for debate. Financially, there would have been even more attractive options than the takeover by Carrier. Bosch, supplier of the Buderus brand, is sticking to its investment program for development and manufacturing in Germany, Portugal and Sweden. It will be increased to more than one billion euros.
It is rare in Germany for a family-majority company worth billions to be sold, surprising both outsiders and the company’s own workforce, but it is not without precedent. In Darmstadt, there was great horror when the Ströher family, which owns the Wella cosmetics group, sold its majority to Procter & Gamble for around 6.5 billion euros. Little was left of the company’s structures. According to many, the business model did not suit the Americans. P&G later sold the Wella business to competitor Coty, who years later passed it on to US financial investor KKR. In the German pharmaceutical industry there are two spectacular examples where owner families decided that the company was too small to survive: Altana and Schwarz Pharma.
When Quandt heiress Susanne Klatten decided to have the pharmaceutical business and thus the main division of the then Dax group Altana auctioned off, employees found out about it from the press. The decision turned out to be fatal for the pharmaceutical location of Konstanz. The business ended up in a roundabout way with the Japanese Takeda group. Schwarz Pharma went to the Belgian UCB. One cannot compete internationally, the research budget is simply too small, said the main owner and patriarch Patrick Schwarz-Schutte. The family paid the employees a bonus on the occasion of the sale – similar to what is happening at Viessmann now. More recent examples of families exiting for billions include auto parts maker Hella, which went to France’s Faurecia, and sandal maker Birkenstock, which sold to private equity firm L Catterton.
