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Grundig joins list of failures
MUNICH, Germany (Reuters) -- Loss-making Grundig, Germany's best-known maker of televisions and radios, became the country's latest high-profile corporate failure on Monday when it filed for insolvency after failing to find a partner to bail it out. The move, concluding years of decline for a group which rose to prominence during Germany's postwar years, adds to a list of company failures that has grown relentlessly as the country's economic growth has stagnated. "We have made an insolvency filing,'' Guenter Moissl, finance chief of the German consumer electronics maker, told Reuters. He declined to comment further. A court in the southern German town Nuremberg, where the company is based, confirmed the filing. Banking sources said Grundig's creditors had decided not to extend credits of over 200 million euros ($214.9 million). Grundig had been fighting for years to find a partner to ensure its survival but had become a shadow of its former self. It currently employs just 3,500 people worldwide compared with over 10 times that number in the late 1980s. A Grundig supervisory board member told Reuters last week the company faced insolvency after Turkish appliance exporter Beko dropped plans to buy a majority stake. The failure of that deal came just a month after the company said talks had ``gone quiet'' with another possible buyer, Sampo Corp, one of Taiwan's largest consumer appliance makers, for a controlling stake. Grundig, whose listed peers include Philips Electronics of the Netherlands, produces television sets, video and DVD players. It was once the biggest radio manufacturer in Europe and had sales of 1.3 billion euros in 2001. It joins a growing list of famous German corporate names including building giant Holzmann, engineer Babcock Borsig and stationery maker Herlitz in Europe's largest economy. According to the Federal Statistics Office, insolvency filings in Germany totalled 84,428 last year including the self-employed, helping to push jobless numbers well above four million. HistoricThe failure of Grundig, founded by a Nuremberg electrician who began making radios after work in the 1930s, comes after 20 years of growing pressure from cheaper and more efficient Asian rivals, which bridged the quality gap that had set Grundig apart. The European Commission said late last year it had allowed Bavaria, where the company is based, to guarantee a 45 million euro loan aimed at keeping Grundig in business for at least six months so it had time to decide on its future. While parts of the business have attracted interest, notably the still well-regarded Grundig brand name and an extensive sales network, due diligence work has invariably shown up major problems that have scared buyers off. "After detailed work and evaluation, it was decided not to buy the shares in Grundig AG,'' Beko said in a statement last week, without providing details. Industry observers said the firm was too small to compete on the world market with Asian giants such as Sony Corp or Samsung Electronics and that management failures over the years had also contributed to its collapse. "Catastrophic'' was the word used by one banker who examined the company's books on behalf of a potential buyer. "They didn't even have a clear idea themselves what they were making. The accounts were a complete mess. It was completely unclear exactly what you would have been getting into.'' Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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