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The Strong Hand Of A Shy Billionairess


The Quandt dynasty has long been one of the silent but potent forces of German capitalism. With a combined 47% stake in luxury auto maker BMW, the clan's top three members are worth about $19 billion, according to Germany's Manager magazine. The Quandts have also invested across German industry, showing a penchant for patient investing that few in Europe can match.

So when a Quandt sanctions big changes at a company she controls, the markets pay attention. The Quandt in question is billionairess Susanne Klatten, who, as a great granddaughter of the dynasty's founder, G?nther Quandt, owns a 12.5% stake in BMW. The company: Altana, a drug and chemicals group with $3.5 billion in annual sales and a coveted spot on the DAX German stock index.

STRONG CHEMICALS

What does Klatten, a 43-year-old publicity-shy mother of three with a 50.1% stake in Altana, want out of the companyse? To unlock its value and reduce her exposure to the challenging pharma industry. Altana has two parts. One, a $622 million-in-sales chemical company, is doing well and has just bought Eckart, another German chemical maker. The other, a drugmaker with $2.5 billion in sales but limited growth prospects, is looking to combine with a partner. Klatten and Chief Executive Nikolaus Schweickart want to split them apart. Why? They're betting each will perform better separately. If the market agrees, both the share value of the chemicals unit, now worth about $2 billion, and the pharmaceutical unit, worth about $5.5 billion, could get a lift.

For years Altana argued its dual structure was a good way to hedge bets. But a series of setbacks to its drug pipeline this year forced the rethink. In recent years the double-digit growth of blockbuster ulcer drug Pantoprazole (known in the U.S. as Protonix) helped transform this once obscure company into a blue chip with listings in Frankfurt and New York. Trouble is, "Panto" accounts for more than half of Altana's pharma earnings, and its patent starts expiring in 2009.

Altana is hoping two respiratory treatments now in development will each eventually bring in about $1 billion in new revenues. But on July 1, Pfizer Inc. (), which had teamed up with Altana to develop and sell one of the drugs, Daxas, withdrew from the deal after months of delays and setbacks. Altana's stock plunged nearly 16% on the news. Then, on Nov. 15, it pulled its European filing for Daxas after the European medical regulator requested more research. Altana shares now trade roughly where they were in 2002.

Little wonder, then, that Altana is eager to join forces with another drugmaker. For Klatten, moreover, bringing in a partner means she can reduce her exposure to pharmaceuticals, with her stake in a stand-alone business dropping possibly below 25%. By contrast, she will keep 50.1% in the chemical business, whose prospects remain solid.

Does this mean Klatten and her relatives are becoming more defensive in their investments? There's no need to tamper with BMW, which is doing well. Still, the Altana story shows that to the Quandts, longstanding businesses are not sacred cows to be left untouched.

By Bettina Wassener


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