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Viag, Alusuisse confirm deal
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November 27, 1998: 3:36 a.m. ET
Companies plan to merge to create new $23.5 billion industrial conglomerate
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LONDON (CNNfn) - German conglomerate Viag AG and Swiss group Alusuisse Lonza Group AG confirmed Friday they've agreed to merge in a stock swap deal that would create a new industrial giant with a market capitalization of more than 40 billion marks ($23.5 billion).
The company will have combined sales of 53 billion marks and net income of 1.6 billion marks.
It will focus on energy, telecommunications, packaging, aluminum and chemicals.
About 2 percent of the group's workforce, some 127,000 people, will be shed. The two companies hope to save 570 million marks a year as a result of the tie-up. One-time costs are estimated at 400 million marks.
Reports of the merger surfaced last week. Viag [FSE: FVIA] stock fell slightly to 1,080 marks on confirmation of the deal in early Frankfurt trade Friday.
The new group, as yet unnamed, will be based in Munich, but will be traded in both Germany and Switzerland. It would be the sixth largest industrial group in Germany, and the largest in Switzerland.
The deal must be approved by 90 percent of the two companies' shareholders.
VIAG chief executive W. Simson, who will be chief executive of the new renamed group, said in a statement the tie-up would boost the companies' industrial earnings.
"It will give us a strong and more focused group with an earnings potential in our industrial operations to match that of our energy and telecommunications activities," he said.
Alusuisse's CEO S. Marchionne will serve as Deputy Chief Executive Officer of the new company.
The companies hope to complete the merger by August, 1999.
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Alusuisse Lonza
Viag
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