Voest Alpine Ag example essay topic

V"OEST - Vereinigte "Osterreichische Eisen- und Stahlwerke AG (United Austrian Iron and Steel Works) The letters "V"OEST" mean Vereinigte "Osterreichische Eisen- und Stahlwerke AG. If you translate these words literally it is United Austrian Iron and Steel Works Inc. The listed voestalpine AG based in Linz (Upper Austria) is the Group holding. The voestalpine Group is one of the largest industrial undertakings in Austria and employs a work force of around 17,000. Sales in the past financial year was about EUR 4.4 billions. The Group is developing into a processing enterprise on the basis of its core competence in steel.

The voestalpine Group is divided in four divisions, namely: . voestalpine Stahl Division. voestalpine Railway Systems Division. voestalpine Profil form Division. voestalpine motion division The V"OEST supplies a lot of branches, for example 26% of its sales derive from automotive industry. Other branches which are supplied by the V"OEST are the white products industry, the construction sub-supply industry, steel and mechanical engineering. Also railway companies and the oil and gas industry obtain products from the United Austrian Iron and Steel Works. The products of the VOEST are delivered to numerous European states (Austria, Germany, Belgium, UK, Italy, France, Sweden, Czech Republic) and the USA.

History Already in 1881 the Alpinemontan cooperation was established. At the turn of the last century Donawitz was the site of the largest iron works in the Austro-Hungarian Empire. After the second world war in 1945 the V"OEST was founded. In the following year the Austrian Government decided to nationalism the V"OEST.

In the following decades there were a lot of mergers for example the ALPINE MONT AN AG and V"OEST AG merge to become V"OEST-ALPINE AG in 1973. However also some subsidiaries were spun off and become independent legal entities for example the VOEST-ALPINE STAHL DONAWITZ Ges. m. b. H. was spun-off from VOEST-ALPINE AG. Because of the initial public offering of the VOEST-ALPINE STAHL AG all partitions, who do not belong to the core business were sold in 1995. The OIAG The four letters stand for " "Osterreichische Industrie holding AG". It is the holding and privatization agency of the Republic Austria. This agency works closely with the industry and does not belong to any political party of Austria.

Its business objective is to achieve an appreciation in value of the companies the OIAG has a holding in. But the OIAG has also the job to privatize a company in the best interests of the company concerned, the Austrian economy and the Austrian taxpayer if there is an instruction of the Republic of Austria. Privatization of VOEST On 9th of May 2003 the government of Austria has placed an order with the OIAG to fully privatize the VOEST. The conditions were that the bigger part of the shares remains in possession of Austria institutional investors and that VOEST persists as an unity.

Further conditions were to continue doing researching and developing in Austria and that decisions are made in Austrian headquarters. On 11th of September the OIAG published detailed information about the disposition of VOEST. The sale comprises a secondary equity offering and an offering of bonds exchangeable into voestalpine AG shares. The equity offering includes a public offering in Austria and an international offering to institutional investors. The shares underlying the exchangeable offering have a value of 15% of the total capital of VOEST and are exclusively sold to Austrian investors. The sale of theses shares will take place in 2006.

On 19th of September the holdings of the OIAG in the VOEST were sold on the stock market. There were sold about 7.7 Mio shares, but the demand was considerably higher. Reportedly the issue was oversubscribed by more than 300%. This is a contradiction of repeated recent reports that demand for voestalpine stock had been low.

The price per share was EUR 32.50, this amount is six times higher than the price that was predicted in March this year. The proceeds of the sale of shares were about EUR 247 millions, further the OIAG takes about EUR 245 millions through the sale of convertible bonds. The pattern of distribution of shares is as follows. Over 60% of the shares were sold to Austrian investors. The bigger part was sold to institutional shares, but also small shareholders have got shares of the company now. It is enjoyable, that the employee participation increased to 10.4%.

There is no other Austrian company which has such a high employee participation. Because the bigger part of shares are in Austrian hands, the unity of the company can be preserved in the long term. Much that it is also granted that the research, development and the decision making can be arranged in Austria. Thus, the conditions of the Republic Austria that were demanded on the OIAG in reference to the privatization are fulfilled. Through the completed privatization there is no more uncertainty about disposition and the political debates are over now.

The successful company can focus there energy on the production of steel. Because of the great success the VOEST do not have to focus on quantity any longer the company can operate their production towards "what to make from steel". The success of the company is clearly to see, if you look up the figures in the balance sheet of the year 2002/2003. In this balance sheet year the voestalpine could make the second best operating result in its history. The sales were about EUR 4.4 billions and the profit was EUR 223 millions. Naturally the amount per share increased, in fact EUR 1.99 per share.

A part of the profit was distributed, the dividend amounts EUR 1.2 per share..