Legal Battle Over MTU Sale

Posted on September 2, 2005
DaimlerChrysler is moving ahead with plans to sell the assets of MTU Friedrichshafen, but faces a legal battle with disgruntled minority shareholders. At issue is whether DCX can use its 88% stake to remove the operating assets from MTU and sell them over the opposition of MTU's founding families. The Brandenstein-Zeppelin and Schmid-Maybach families, who own 12% of MTU Friedrichshafen and have veto rights over its divestment, would then be left with the ability to block only the sale of a hollowed-out holding company.

A DCX spokesman said the company had appealed a preliminary injuction issued by a state court in Ravensburg that prevented the sale of the business as a whole because this was tantamount to circumventing the families' veto rights. But complicating matters, the same court upheld DCX's right to liquidate MTU under some circumstances, something that its statutes allow if shareholders vote 75% in favor, which they did at a shareholder’s meeting earlier.

The spokesman said DaimlerChrysler did not want to break up MTU but rather sell it "in one piece, if at all possible." The families had reached an exclusivity agreement with private equity investor Carlyle, frustrating DaimlerChrysler's efforts to sell it to an industrial partner such as Gemany's MAN, which broke off talks earlier this year.