* Olaf Koch to take over on Jan. 1
* Board member Joel Saveuse renounced candidacy
* Koch seen carrying on with strategy to break-up Metro
* Franz Markus Haniel named chairman (Adds analyst comments)
By Matthias Inverardi and Victoria Bryan
DUESSELDORF/FRANKFURT, Nov 18 World No.4 retailer Metro has picked its high-flying finance director to be its next chief executive, signalling it will stick with a plan to eventually break itself up and defying calls for it to name a retail specialist.
Olaf Koch, who at 41 is the youngest chief executive of any of Germany's 30 biggest listed companies, was not the preferred candidate of the labour representatives on the supervisory board and was only appointed thanks to the new chairman's casting vote, company sources said on Friday.
That suggests Koch will have his work cut out to win over colleagues who thought the group should pick a retail expert to help steer it through turbulent trading conditions that have hammered its shares this year.
Analysts expect Koch will follow the strategy of the previous CEO, his friend and fellow Daimler alumnus Eckhard Cordes, who set in motion as yet unrealised plans to sell department store chain Kaufhof and hypermarket business Real.
With few synergies between Metro's businesses, the plan was to sell off these assets and focus on its cash and carry and electrical goods operations, before eventually perhaps spinning off the latter as well.
Koch also worked with Cordes on a restructuring plan that angered labour representatives with job cuts, but steered Metro to record profits in 2010.
Franz Markus Haniel, head of the family behind Metro's largest shareholder and appointed on Friday as chairman, said Koch "demonstrated that he is driving the changes required for the company's long-term success."
Employee representatives had favoured retail veteran and board member Joel Saveuse. He stepped aside as a candidate, Metro said, confirming a Reuters report.
"I don't think the company is as yet a finished article. Koch is a strategy man, a restructuring man. Saveuse is a very good retailer. But he's not a strategy man," said one analyst who declined to be named and welcomed Koch's appointment.
After a distinct lack of interest over the last year, three bidders have now thrown their hats into the ring for Kaufhof, including the owner of rival Karstadt, Nicolas Berggruen.
Austrian property company Signa is seen as Metro's preferred bidder and has had access to Kaufhof's books.
Some on the supervisory board feel Metro should be more open to the other bidders, sources said earlier on Friday, echoing calls made by Berggruen in a Thursday newspaper interview.
In the long-term, many analysts expect Metro to also float the MediaMarkt-Saturn electricals goods stores to concentrate solely on its cash & carry business.
"The biggest challenge is for Koch to decide on a long-term strategy for cash & carry and to ensure that Media-Markt has the right set-up for a flotation," said Planet Retail's Boris Planer.
Cordes' lack of retail credentials was one of the many criticisms levelled at him as the Metro share price slumped 33 percent this year on consumer confidence worries, weak trading and concerns over its profit target.
The London-based analyst said Koch might run into the same problems as Cordes with the trade unions but that an eventual break-up was still the best strategy for Metro.
"That has always been the agenda of the Haniels. It's just the markets that have made it a very difficult strategy to pursue," he added.
While guitar-playing Koch may not have been the unions' first choice, he is respected by colleagues for his straight forward manner and his rise to head a company with annual sales of 67 billion euros ($90.6 billion) has been swift.
Koch joined Daimler Benz, as it was then called, in 1994, and worked under Cordes when he was engineering the merger with Chrysler. After a two year stint at private equity house Permira, he joined Cordes at Metro as finance chief in 2009.
Koch is seen as so close to Cordes that when the speculation over Cordes' contract renewal was at its peak in September, there was talk he could leave Metro with him.
Haniel had been holding intensive talks over recent days to break the deadlock between the two sides of the 20-strong supervisory board and applauded Saveuse's decision to renounce his candidacy in favour of Koch.
Cordes will stand down on Dec 31.
Shares in Metro closed down 1 percent at 35.52 euros. ($1 = 0.739 Euros) (Additional reporting by Mark Potter; editing by Greg Mahlich)