German Oetker Group sells half of its business

Dr. August Oetker KG, family owned parent company of Germany’s largest private brewing group Radeberger, has sold  the world's seventh-biggest container operator, Hamburg Süd, to Danish conglomerate AP Moeller-Maersk. The shipping division with a €6.1 billion turnover has so far attributed exactly half to Oetker’s sales.

Oetker seeks already for a long time a solution for its ailing division, which is part of the group since 1936 and has in the past always been considered a core investment. In 2013 the owner family and management held talks with local rival Hapag-Lloyd about a possible take-over. Discrepancies between the youngest three children from the third marriage of deceased patriarch Rudolf-August Oetker and the five older children from his first and second marriage terminated those negotiations without a result. In the meantime Hapag-Lloyd went public and started buying other businesses as well.

Since then business environment has deteriorated further and research company Vesselsvalue evaluate the price of Hamburg Süd today only with €1.4 billion, a small fraction of the estimated value a couple of years earlier. Although the sales price to Moeller-Maersk is not disclosed, people close to the transaction see a purchase price not higher than €1.4 billion.

The money could be used to pay out part of the quarrelling family to end the deadlocked situation within the family holding. Less likely but also possible could be that the money is used to strengthen the remaining business, which consists of the €3 billion Food Division (mainly frozen pizza, baking powder, cake mixes, yogurts, pudding, cake decoration and cornflakes), the €2 billion Beer and Non-Alcoholic Beverages Division (Radeberger Group with brands like Radeberger, Schöfferhofer, Clausthaler, Berliner Pilsener and others, Selters Mineral Water, Pepsi, Bionade, Ti), the €0.7 billion Sparkling Wine, Wine and Spirits Division (Henkell, Fürst von Metternich, Deinhard, Wodka Gorbatschow, Kuemmerling, Fürst Bismarck and others) and the Rest of the Group (banking, chemical industry, luxury hotels, information technology, procurement services and logistics), which accounts for €0.5 billion.

The sale could also enable changes in the senior mangement: August Oetker (72), currently chairman of the advisory board of Dr. August Oetker KG and his younger brother Richard Oetker (65), personally liable partner and in charge of food, sparkling wine, wine and spirits could both step down and give way to their younger half-brothers Alfred (49) and Carl Ferdinand Oetker (44). Another scenario sees the two sons of August Oetker, Philip (34) and Alexander take leading roles within the business.

People from outside the business believe that Albert Christmann (53), also personally liable partner and in charge of banking, corporate finance and other interests would be the best choice to take over the lead. But this might be very unlikely given a statement of August Oetker in 2008 in an interview with German newspaper FAZ when asked if somebody from outside the family could be number one in the company: “This is theoretically possible”, he said, “but practically very unlikely. Because there are too many of us. We have a certain reproduction ratio within our family. My father has eightfolded. One of my sisters has quintupled. And I have six children”.

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