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Business

Deceased Billionaire's Business Empire Cuts Deal to Survive

A deal with creditor banks will likely save the debt-ridden business group headed by German billionaire Adolf Merckle, who committed suicide recently amid a host of financial problems.

Ratiopharm company logo outside the firm's headquarters in Ulm

Ratiopharm will be sold in a deal to save a larger business empire

Merckle's VEM group said in Frankfurt on Wednesday, Jan. 7 it obtained a bridging loan of 400 million euros ($545 million) from a consortium of about 30 lenders in a deal that the billionaire owner concluded before his death two days earlier.

The agreement requires VEM to sell its drug company Ratiopharm and for Merckle's son Ludwig to leave that firm, which employs 5,400 people and had 1.8 billion euros ($2.5 billion) in sales in 2008.

The sale of Ratiopharm is aimed at ending a liquidity crisis in VEM, which has about 100,000 employees altogether. Only Ratiopharm is mentioned in the deal with the banks, and an administrator will be appointed to manage the transition.

German media reports say the sale is unlikely to take place before the end of 2009. One reason for the delay is that it will take time to work out details of a plan to put the company's affairs in order.

A second issue is reportedly the assumption among those involved in the deal that international markets will be less volitile in one year, which would supposedly make it easier to secure a better price for Ratiopharm.

The company is one of the central elements of VEM. Other major components of Merckle's empire are HeidelbergCement and the drug wholesaler Phoenix.

Merckle (74) was Germany's fifth wealthiest man and ranked 94th on Forbes list of the world's richest people. He said in a recent interview that he had lived through many stock market crashes but was not prepared for "a banking and financial crisis on the scale" of the present one. His family said after his death that the impact of the crisis on his traditional, family-run business he built up in the course of his lifetime left him "a broken man."

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