Austria turns down DIY millionaire's art collection

VIENNA Wed Apr 2, 2014 4:29pm EDT

VIENNA (Reuters) - Austria turned down on Wednesday a request from a home-improvements millionaire to buy his modern art collection, rejecting his argument that 4,000 jobs in his struggling company were at risk if it did not do so.

The government said last week it was prepared to buy the Essl collection if necessary to save jobs, but ministers have since concluded the BauMax DIY store chain could come to an agreement with its creditors.

"There will be no acquisition by the republic," Culture Minister Josef Ostermayer told journalists after marathon talks with BauMax owner Karlheinz Essl, his creditor banks and the labor and culture ministries.

"There was an alarm call and we tried to build a bridge," he said. "We are confident of a positive outcome."

BauMax employs around 10,000 people in Austria and eight other countries and is struggling with a restructuring after an ambitious expansion into eastern Europe and Turkey.

Ostermayer said the collection, which includes work by major Austrian artists such as Oskar Kokoschka and Hermann Nitsch and international names including Gerhard Richter, Sam Francis and Anish Kapoor, would stay open without state support.

The proposed acquisition of one of Europe's biggest modern art collections, housed in a museum in the northern Vienna suburb of Klosterneuburg, met with criticism from many corners despite Austria's self-image as an art-loving nation.

Critics argued that the collection, valued at up to 250 million euros ($344 million), was of mixed quality and the money could have been better spent on causes like saving the recently scrapped Science Ministry.

Saving jobs is a top political priority in Austria, which has the lowest jobless rate in the European Union.

But at the news conference to announce the decision, Social Affairs Minister Rudolf Hundstorfer said: "We have our limits."

(Reporting by Georgina Prodhan; Editing by Tom Heneghan)