Waterford may have gained a 51% interest in German firm

Waterford Wedgwood may have gained a 51 per cent controlling interest in the German publicly quoted, porcelain manufacturer, Rosenthal.

Following the bid to acquire the outstanding shares it does not own in Rosenthal, Waterford Wedgwood has been buying Rosenthal shares in the market. It is likely to have reached the 51 per cent level by the time it briefs analysts on the deal this morning. Waterford Wedgwood had owned 32 per cent of Rosenthal and has options over 13.5 per cent. It did not have much leeway to make up but there is a tight market in Rosenthal shares. Nevertheless, Waterford Wedgwood had been able to pick up shares at up to 200 deutschmarks cash, the tender offer price. If Waterford Wedgwood can confirm it has reached a controlling interest, it will then be able to exercise full control of the company's management. The two company have been working closely together but now Rosenthal's accounts will be consolidated with Waterford Wedgwood's. Rosenthal has been losing heavily but a rationalisation programme is expected to result in a return to profits. Rosenthal expects profits of between DM2 million (£770,000) and DM3 million (£1.15 million) in 1998 after a loss of nearly DM 49 million in 1996. The company confirmed that it will nearly break even on an operating level in 1997, as sales grew by about 2 per cent.

With Rosenthal under its belt, the enlarged company will have sales of DM1.4 billion (£538 million) making it the world's largest maker of porcelain and ceramic products. The offer was made just 11 days ago. It represented an 18 per cent increase on the price quoted on the Frankfurt stock Exchange before the announcement. It has been recommended by the Rosenthal board. There have been different view on the price being offered. NCB, which recommended the Rosenthal shares at DM140 last August, has described it as "too cheap". However, BNP, another firm of brokers considered it "fair" and advised shareholder to accept. BNP expressed doubts that the share price would reach DM200 or more within the next 12 months. The official offer document, circulated to Rosenthal last week, noted that a "fair valuation" of DM170 had been placed on the shares by SudTreu, Suddeusch Treuhand Aktiengesellschaft. The Rosenthal shares are widely spread among institutions and private investors. Waterford Wedgwood last week ruled out the possibility of gaining a 100 per cent stake in the German firm. Mr Richard Barnes, Waterford Wedgwood's finance director, has said there is unlikely to be a response from 10 per cent of the shareholders and he hoped the employees would keep their shares, accounting for a further 6 per cent.