FRANKFURT/DUESSELDORF, Germany, Nov 19 (Reuters) - Finland’s Kone has proposed paying a multi-billion euro breakup fee to Thyssenkrupp in an effort to improve its chances in an auction for the German conglomerate’s elevator business, two people familiar with the matter said.
Kone, in a partnership with private equity firm CVC , is among suitors for Elevator Technology (ET), which has been put up for sale in a bid to pay down pensions, debt and invest in restructuring its other struggling businesses.
Kone, the only strategic bidder remaining in the auction, faces regulatory hurdles since a combination of Kone with ET, the world’s third- and fourth-largest elevator makers, would create a new global champion, raising antitrust concerns.
Kone’s offer is being reviewed alongside offers from private equity consortia which do not face lengthy antitrust reviews, giving Thyssenkrupp greater certainty about a successful sale.
Paying the break-up free - which one source put at 3 billion euros ($3.3 billion) - upfront would make it easier for Thyssenkrupp to accept a Kone deal, which could face an antitrust review lasting up to a year.
The group needs cash fast to repair its stretched balance sheet, aching under 8.5 billion euros in pension obligations as well as net debt of 5.1 billion, which is more than twice its equity. ($1 = 0.9025 euros) (Reporting by Arno Schuetze, Edward Taylor, Christoph Steitz and Tom Kaeckenhoff Editing by Michelle Martin)