Europe’s crisis is imposing fiscal discipline on working households, spendthrift governments -- and the occasional billionaire.
Thomas Straumann, who until last year owned an Aston Martin DB5 used to promote the 1965 James Bond movie Thunderball, a majority stake in luxury watchmaker H. Moser & Cie. and a hotel in the Alpine resort of Gstaad, Switzerland, was forced to let go of a few of his favorite things.
The 49-year-old Swiss executive in November cut his stake in Straumann Holding AG (STMN), the dental-implant maker founded by his grandfather and father, for the first time in five years after the stock dropped by a third over six months, erasing about $931 million in market value. He put two hotels up for sale as well as his stake in Moser. Now, the Aston Martin is on the block too, with a 3-million-pound ($4.6 million) asking price. Until the stock recovers, he’s no longer a billionaire.
“The key feature of this recent financial crisis is that it wasn’t just a downturn in individual assets, but over all financial markets,” said Martin Brown, a professor at the Swiss Institute of Banking and Finance at the University of St. Gallen. “Richer people lost more, proportionately.”
Straumann, an engineer by training and a self-described bon vivant who had cigar-smoking salons built at his hotels in Gstaad and Basel, has seen his net worth decline to $708 million from about $1.18 billion two years ago, according to data compiled by Bloomberg.
He holds 17 percent of Basel, Switzerland-based Straumann, the dental company that bears his name, after selling 10 percent to the Government of Singapore Investment Corp. in November. The stock has declined 69 percent from its 2007 peak as people hamstrung by the economic downturn delayed dental work like crowns and bridges, which are largely paid out of pocket.
“Until now I could juggle everything, but the economic environment has changed and demands that I am much more focused,” Straumann told Hotelier magazine in an interview published Nov. 1. He declined to be interviewed for this article through Mark Hill, a company spokesman, and Karin Rhomberg, a personal spokeswoman based in Zurich.
Straumann isn’t the only wealthy executive having to make tough choices. Robert Stiller, founder of Green Mountain Coffee Roasters Inc. (GMCR:US), lost his job as chairman in May because he violated company rules to sell shares to meet a margin call after the stock had tumbled. Fellow Swiss medical-device entrepreneur Andy Rihs said Jan. 17 he planned to cut his stake in hearing-aid maker Sonova Holding AG (SOON) to 6 percent from 7.6 percent, citing the need to fund his other business activities.
“For entrepreneurs who are invested in their own companies the risks are higher if their industry is most exposed to the downturn,” said Brown of the University of St. Gallen.
Straumann’s move to divest two hotels, Les Trois Rois in Basel and the Grand Hotel Bellevue in Gstaad, as well as the majority stake in watchmaker Moser, wasn’t quite a fire sale, according to a person familiar with the transactions who didn’t want to be identified because they were private. Even so, he lacked wiggle room. He had used Straumann stock as collateral to buy some assets, and when shares plunged he had to pay back the loan, the person said.
Or, in the language of the statement Straumann released on Nov. 26, “the prevailing weak economic environment has made it necessary to reallocate funds in order to support and meet my investment commitments.” He didn’t provide details.
The Straumann stake sale left the company, which ranks as the world’s biggest maker of dental implants, more vulnerable by generating speculation about takeovers and creating a distraction, said Marc Booty, senior analyst covering global health care at Pictet Asset Management in London.
“It’s been a diversion from what’s really going on at the company,” Booty said. “It’s well run and well positioned versus peers.” Pictet owns 0.41 percent of Straumann shares, according to data compiled Bloomberg data.
Straumann’s asset sales have been documented by the Swiss press with more than 20 articles published since September, with headlines such as “Too little flesh on the bones,” and “Thomas Straumann sells the silverware” in SonntagsZeitung.
One sale that hasn’t been public until now: The Aston Martin, one of four used for filming or promotion of Bond films. Straumann acquired the car in 2006 for 2.7 million Swiss francs ($2.9 million now) and had it restored, according to a 2010 report in Bilanz magazine. Straumann showed off the car, identified by its chassis number, in 2009 in a six-page spread in the magazine for guests of his hotels.
A car with the same chassis number is for sale by Richard Stewart Williams Ltd. in Surrey, England. The firm confirmed the 3-million-pound asking price but wouldn’t comment on the seller’s identity.
Straumann won accolades for finding the right buyer in two other sales -- Moser and the Gstaad hotel.
“It’s quite normal that you re-consider your financial and personal priorities when the stock price of your company changes,” Roger Nicholas Balsiger, whose great-grandfather founded Moser in 1827 in St. Petersburg, said in an interview. Balsiger and Straumann re-launched Moser together in 2006.
“Straumann will, even in difficult situations, make sure that any solution is a good one for all involved,” he said.
The Moser stake was sold to Georges-Henri Meylan, former head of Swiss luxury watchmaker Audemars Piguet. Straumann lost about 100 million francs with Moser and spent more than that amount on hotel renovations, the person familiar with his transactions said.
The Bellevue, a stately building located near Gstaad’s pedestrian center which Straumann led through 15 months of renovation, went to Rudolf Maag, a former chairman at Straumann the company, and his son in law, an experienced hotel redeveloper. The sale amounts weren’t disclosed.
Straumann got a “fair price” for it, said the person with knowledge of the transactions who declined to be identified. The five-star Bellevue boasts a spa with a salt grotto, a cigar room with black leather ottomans and two Steinway pianos in the lobby following the Straumann revamp.
“He put incredible quality into this asset,” Maag’s son in law, Daniel Koetser, said in an interview. “Every article of furniture is immaculately selected on the basis of quality.”
The Basel hotel, which Straumann spent more than 150 million Swiss francs renovating, has yet to find a buyer. Straumann also has an investment in Medartis AG, a maker of plates and screws for reconstructive surgery, and owns show- jumping horses.
His involvement in Straumann hasn’t always been smooth. The founder’s grandson, he took over as chairman in 1990 after a management-led buyout of the orthopedic implants division created a separate company called Synthes. The remaining firm, which he headed, began trading on the Swiss stock exchange in 1998. Straumann stepped down as chairman in 2002 after two CEOs quit within 10 months, citing differences of opinion with him. He has remained on the board since.
Straumann started to get to know the company as an apprentice, delivering sandwiches and doing other odd jobs such as cleaning, he said in an interview in the company’s newsletter published in March 2011.
One thing he learned through three generations at the helm of a single company is to build something for the long term, according to Balsiger, the descendant of Moser’s founder.
“He’s committed to his projects, and if you realize that you have to re-align priorities, he will make sure that it’s done in a way that isn’t disruptive,” Balsiger said. “In any case, the things that he does will last for decades rather than weeks or months.”
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