Newspaper: Phoenix group put up for sale

Banks have put up for sale the UK operations of Adolf Merckle, the German billionaire who committed suicide on Monday night amid the collapse of his empire, the Times has reported

Phoenix Group, owner of the third-largest drugs distribution business in Britain and the 500-store Rowlands pharmacy chain, is set to go on sale with an estimated value of up to six billion euros (5.44 billion pounds).

The newspaper report said that the trade is one of several conditions demanded by the creditors of the late German industrialist, in return for a 400 million euro bridging loan to keep his holding company afloat.

He owned a controlling stake in VEM Vermogensverwaltung, Phoenix’s holding company.

Ludwig Merckle, one of Adolf’s sons, will also step down from his role as co-head of VEM as a condition of the bridging loan deal, under which the banks have agreed not to call in any loans until at least the end of March.

However, the Times has learnt that Merckle’s holding company has already agreed with its creditors to sell its controlling interest in Phoenix this year.

Phoenix, which has its headquarters in Mannheim, Germany, employs about
22,000 people across Europe and has an annual turnover of about 22 billion euros.

The company has about 6,500 staff in Britain and its annual sales are approximately 1.2 billion pounds, with about 15 per cent of the drugs distribution market.

VEM will first sell Ratiopharm, the German generic drugs company, as part of its deal with the banks, which include Royal Bank of Scotland, Deutsche Bank and Commerzbank.

The group also owns Hanson, the British building supplies business, but it was unclear last night whether any decision had been taken on its future.

VEM said that it had no plans to sell any of its other businesses until KPMG, the auditor, had completed a three-month review of the group.

The sales of Ratiopharm and Phoenix would give VEM some much-needed cash. A loss that exceeded 200 million euros on a bad bet on Volkswagen shares, the credit crunch and heavy debts have brought the group to the brink of collapse.