| By Sarah Marsh FRANKFURT (Reuters) – In killing himself German billionaire Adolf Merckle has become the latest casualty of the global financial crisis, his family saying on Tuesday he was broken by the struggle to salvage their business empire.
Merckle, who was the world’s 94th-richest person in 2008 according to Forbes magazine, spent his life building a business conglomerate with about 100,000 employees.
The empire was poised to come crashing down after his family made wrong-way bets on skyrocketing Volkswagen shares.
The family has been under pressure to sell some assets or seek bridging loans and has been in talks with banks for weeks.
“The desperate situation of his companies caused by the financial crisis, the uncertainties of the last few weeks and his powerlessness to act, have broken the passionate family entrepreneur and he took his own life,” a family statement said.
The 74-year-old industrialist died when a train struck him late on Monday, said prosecutors in the southern German town of Ulm, near Merckle’s home.
Little was publicly known about the father-of-four, who lived in the southwest German state of Baden-Wuerttemberg and was said to enjoy skiing and mountain-climbing.
He received the German Federal Cross of Merit in 2005 for his achievements in fostering economic growth in the state of Baden-Wuerttemberg.
Market players said Merckle liked to keep a low profile and had seemed like a conservative investor.
Yet he became the most well-known victim of a share market squeeze which briefly made carmaker Volkswagen the world’s most valuable company late in October.
Its share price rocketed to just over 1,000 euros from 210 euros in two trading sessions after rival Porsche made a surprise stakeholding announcement that sent short sellers of VW shares running for cover.
“He had a reputation for being very, very prudent, very cautious — a typical entrepreneur who always remained down-to-earth. So it was a huge surprise,” said an analyst who asked not to be named.
At the time there was mostly speculation about banks and hedge funds that could have made heavy losses on VW. But banking sources told Reuters that Merckle’s losses were estimated at 400 million euros ($539 million).
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STRUGGLE TO SAVE EMPIRE
A lawyer by education, Merckle held talks on state guarantees with German regional government of Baden-Wuerttemberg, although he ultimately opted out of such backing and sought to seek bridging loans from banks.
The prospect of a rich individual seeking state backing, with taxpayers’ money, for losses caused by perceived reckless speculation sparked controversy in Germany.
“The billionaire with empty pockets” read a headline at Suedeutsche newspaper. “Will Merckle, the gambler of billions, be saved by the state?” asked Suedkurier.
The losses fueled speculation that the industrialist could sell generic drug company Ratiopharm or part of his stake in HeidelbergCement — both of which are based in Baden-Wuerttemberg.
Ratiopharm and HeidelbergCement are just two companies in the vast portfolio of the Merckle family, which also includes a maker of grooming vehicles for ski slopes, a sugar refinery and one of Germany’s oldest foundries.
The whole portfolio generates around 30 billion euros in annual sales.
“Adolf Merckle collects companies like others collect watches,” wrote Manager Magazin in one of the few extensive portraits of the German billionaire. “Hardly a single other German corporate dynasty acts in such unpredictable and relentless way as the Merckle clan from Blaubeuren.”
Forbes recently ranked Merckle Germany’s fifth-richest man with a fortune worth an estimated $9.2 billion. According to Forbes, Merckle’s fortune was initially inherited from his Bohemian grandfather, but he had grown the latter’s chemical wholesale company into Germany’s largest drugs wholesaler, Phoenix Pharmahandel, with annual sales of 21.6 billion euros. |
about 1 year ago
A follow-up editorial:
Shame, not loss, prompts prominent suicides: experts
By Erik Kirschbaum
BERLIN (Reuters) – Deep feelings of shame rather than material losses were probably behind the suicide of German billionaire Adolf Merckle and some other prominent casualties of the global financial crisis, according to mental health experts.
Merckle, who threw himself in front of a train near his home on Monday in despair over huge investment losses, has joined a lengthening list of high-profile investors around the world to take their own lives.
“An industrialist losing a fortune on the stock market has different motives for killing himself than a father with six children who loses his job,” said Detlev Liepmann, professor of economic psychology at Berlin’s Free University.
“Merckle’s livelihood was certainly not threatened by his risky investments but he was threatened by shame, a loss of face in society and a loss of honor,” said Liepmann.
Before 74-year-old Merckle, who was ranked as Germany’s fifth-richest person by Forbes magazine, French money manager Thierry Magon de la Villehuchet was found dead last month in his New York office; his wrists were slit with box cutters.
The co-founder of money manager Access International was reportedly distraught about losing up to $1.4 billion in client money to Bernard Madoff’s alleged fraud.
“People like Merckle may be highly motivated but also highly sensitive,” said Gerrit Grahl, a psychotherapist in Frankfurt’s banking quarter who treats 400 patients a year — with managers and bankers now outnumbering all professions combined.
“It’s unfortunate he killed himself because he could have been treated. Many other people in the same spot would say ‘to hell with it’. They’d look to save their own tail and wouldn’t think of killing themselves no matter what happens.”
EMPIRE ROCKED BY CRISIS
The World Health Organization warned in October the crisis would cause increased mental health problems and suicides.
“There is clear evidence that suicide is linked to financial disasters,” WHO director general Margaret Chan said at the time. “I am not talking about the millionaire jumping out of the window but about poor people.”
Merckle did not opt for the window. Instead the media-shy billionaire, whose family controls some of Germany’s best-known companies, jumped in front of a train in the darkness near his villa in the southern town of Blaubeuren.
The train driver did not even see him. Merckle’s dismembered body was found hours later.
He had assembled a business conglomerate with about 100,000 employees and 30 billion euros ($40 billion) in annual sales.
But the empire was rocked last year by wrong-way bets made on shares in Volkswagen. Banking sources told Reuters the family lost hundreds of millions of euros on investments, with about 400 million euros lost on Volkswagen shares alone.
In an interview in the Frankfurter Allgemeine Zeitung newspaper last month, Merckle said what pained him most “…is that I’m being attacked and portrayed now as a gambler.”
Grahl, the psychotherapist, said: “Here was a man who spent a life working hard to do good but saw it all in ruins. He saw financial failure and thus felt his life was a failure. The minds of people like that recall only the negatives of their whole lives and blot out positives. They feel guilt and shame.”
There have been other suicides related to the crisis.
In London, millionaire chief operating officer of private equity firm Olivant, Kirk Stephenson, was hit by a train in London in September. A jury later returned a suicide verdict.
In Brazil, a trader shot himself at Sao Paulo’s commodities exchange in November. He survived in critical condition.
In Los Angeles, out-of-work money manager Karthik Rajaram, 45, killed himself and his family in October. Police said Rajaram had said in a suicide note he was broke and had lost most of his assets in the stock market.
(Editing by Giles Elgood)
about 1 year ago
I believe in the saying that it is not how sucessful you can be but how you stand up after failure that makes you a hero.
Actually I have abundant experiences of failure, such as failing interviews for an organization that I long to join, not getting expected results for a subject that I worked hard for etc. I used to complain that I had very bad luck, but on the other hand I understand that there is still much affort to pay before one can sucess. So failure is actually a precious opportunity to know myself better and to start another round of fighting.