So imagine the surprise inside Germany Inc. when Neukirchen and Werner suddenly announced their resignations on Apr. 10. Their nemesis: the reclusive Happel, 54, who had quietly built up his stake in MG to a level that gave him effective veto power. Happel is poised to take a seat on MG's supervisory board, while industrialist J?rgen Heraeus, a Happel ally, will become chairman. Happel is expected to push for the breakup of the $9 billion company. If he succeeds, he could inspire shareholders to force radical change at other under-performing companies, of which Germany has far too many.
This is not the first boardroom drama involving MG. When it was known as Metallgesellschaft, the company was a member of Germany's blue-chip DAX index. But MG's predecessor nearly went bankrupt in the early 1990s amid huge losses from futures trading. After taking over in 1993, Neukirchen slimmed down MG and prevented its demise. But he never succeeded in reviving the shares, which have lost two-thirds of their value during his tenure. "Neukirchen took over in a very difficult situation and brought MG to where it is now, but the question is whether he could have made more out of it," says Friedrich Diel, a fund manager at Frankfurt Trust Investment in Frankfurt. The pain continues: Deutsche Bank, a big MG shareholder, will write down an estimated $110 million to reflect MG's declining value.
How did Happel prevail? Initially, he appeared to have erred badly when he took a 10% stake in MG in 1999 as partial payment for GEA, the Bochum-based engineering company founded by his father. But he soon took action. In 2001, he sued to force a review of MG's accounting, which he believed was faulty, an assertion Neukirchen and MG vehemently deny. Last year, Happel succeeded in blocking plans by MG to issue new shares. By April of this year, he had discreetly built his stake to more than 20%. In league with like-minded investors, Happel garnered enough votes to control the upcoming June 3 shareholders' meeting. "For Werner and Neukirchen the situation was untenable," says Gerd Delaveaux, a member of MG's supervisory board who represents workers. Happel says through a spokesman he does not want to comment ahead of the meeting. Neukirchen declined to comment, while Werner has been seriously ill and was not available.
MG shares have already surged over 30% since Apr. 10 amid investor relief that the fight is over, and on speculation the company would be worth more in pieces. But boosting the company's value may not be that easy. Labor unions, who by law have half the seats on the supervisory board, say they will oppose a breakup. And it may be tough to find buyers for MG's unprofitable units, such as its Lurgi Lentjes plant-building subsidiary.
Still, Happel's r?sum? suggests he might succeed. Happel was still an engineering graduate in his mid-20s when his mother died and he inherited responsibility for GEA. With the help of professional managers, Happel made GEA into a profitable builder of plants and equipment for industries ranging from pharmaceuticals to electricity. But Happel's lifestyle suggests he would like nothing better than to fade from public view -- assuming his interests are in good hands. If they're not, it's unlikely any adversary will make the mistake of underestimating him. By Jack Ewing in Frankfurt