Intracom seems to be having second thoughts about major stake in Siemens Tele Industrie

Judging by all indications, telecom equipment-maker Intracom’s plan for acquisition of a 41 percent interest in Thessaloniki-based Siemens Tele Industrie AG, which had been presented as a key strategic investment that would offset the gap from the end of Intracom’s collaboration with Ericsson, is foundering. Around the end of August, Intracom is said to have asked the sellers (Siemens, 70 percent, and National Bank of Greece, 30 percent) for a further extension of the deadline for completion of the deal, but this was not given. The German subsidiary now seems to hold the view that Intracom’s interest in not genuine or that it used the prospect of the acquisition to promote other goals, including stock market «games.» Intracom’s bargaining with Siemens Tele Industrie (since the 1980s, the two have been the main suppliers of the until recently monopolized utility OTE Telecom, in an informal sharing agreement) began three years ago. Intracom was anxiously seeking a technological booster and the parent company Siemens was about to launch a restructuring plan for the group which provided for the closure of several plants in Europe. It was the time when the big telecom giants had decided to keep their research and development units and assign production to third parties. Siemens Tele Industrie appeared to be part of the streamlining plan and Intracom appeared as the savior. The minority shareholder National Bank (NBG) sought to divest itself of what appeared as an investment of doubtful prospects, fully dependent on the wishes of its multinational partner; it had already unsuccessfully attempted to exchange its 30 percent interest with shares of the German parent company. Consultations between Intracom and the two partners in Siemens Tele Industrie started indirectly in 2001, when a well-known retail trade businessman, affiliated to Intracom’s president, Socrates Kokkalis, initially expressed interest. Intracom itself emerged as a direct negotiator soon afterward. The company was evaluated at about 86 million euros and a tripartite agreement was initialed in the spring of 2002, according to which Intracom would acquire 41 percent of Siemens Tele Industrie for about 34.4 million euros. This would come from a 29 percent interest of the Siemens parent firm, which would now also hold 41 percent, and from a 12 percent stake from NBG, which would thus reduce its interest to 18 percent. No sooner had the European Union’s Competition Committee given its blessing for the plan last April than Intracom started asking for extensions. Some claim it was pressing for more favorable terms, but others speak of second thoughts as a result of a lack of liquidity and other considerations; according to one of these, with the downturn in the telecoms sector in the last three years Intracom already faced sizeable idle capacity, having in fact laid off a large number of employees, particularly those hired on term contacts. When a further extension was requested in the summer, the Germans are said to have blown their top. The fate of the deal should soon be apparent.