The City of Hamburg has announced this week that it will sell its stake in leading cosmetics manufacturer, Beiersdorf. However, the shares will remain within Germany to counteract job losses and ensure it remains a Hamburg based company.
The Deutch Bank is representing the City of Hamburg in the sale and has said that it will sell its 10 per cent stake in the company, bought in 2003, for an estimated €1.21 bn based on an accelerated bookbuilding process.
The sale comes at an unlikely time, with Beiersdorf having just announced that its overall operating earnings for 2006 rose to €590 m, an 11 per cent increase from the like for like period in 2005. Group sales were up 7.2 per cent to a record €5.1 bn from €4.7 bn last year.
However, Hamburg's finance minister Michael Freytag told the Financial Times Deutchland that it had always intended to sell its stake in the company. Therefore the news does not follow reports from industry insiders that the company has not preformed as well as expected, despite the high sales growth.
"In the meantime, all our goals have been attained. Beiersdorf remains a Hamburg company and the threat of job losses has been fended off," Freytag was quoted as saying.
Beiersdorf, manufacturers of Nivea skin care, took major steps last year in order to cement its position as industry leader in the cosmetics market, including the announcement in July 2006 that it was putting up for sale a soap production facility in Hirtler, Germany. The move put 93 jobs in the balance but the company said that it was hoping another personal care company would buy up the facility and retain the staff.
This followed news in March this year that the company was considering the possible closure of manufacturing facilities in Sweden, Belgium and the Netherlands, with the potential loss of 400 jobs.
Therefore the decision to sell to German investors in an attempt to reduce further job losses will no doubt come as welcome news to the company.
Beiersdorf is hoping to further consolidate its industry position in 2007, with Thomas Quaas, executive board chairman, stating that the company is looking to build on both its sales and EBIT margins during the course of the coming financial year.
As a result he has underlined three core areas that will be given special attention in the future, including increasing critical consumers, competing against increasingly aggressive competition and the area of private labels.