The History and Downfall of a German Wholesale Company “Wollschläger” – Part 4

It continues with the last part of the story and the downfall of the wholesale company “Wollschläger”. What can wholesale companies learn from this? Click here, if you have not read part 3 yet.

The history of Sanistål dates back to the mid-19th century when several Danish metal entrepreneurs joined forces through a series of mergers.

In 1853, A. Schjøth started his business in Vejle. Twelve years later, L.S. Lange started selling castings in Aalborg. He would later take over Schjøth’s business.

In 1921 L.S. Lange’s business was taken over by NK. Strøyberg, which on 1926 merged with the iron and castings business Unmack og Petersen A/S. 90 years later, the company traded publicly in Denmark on the Omx Nordic Exchange Copenhagen (XCSE / CPH). It had about 500 million euros of revenues and was a competitor of Wollschläger in the German market via its subsidiaries. Christian Lund was Sanistål‘s CEO. Lund declared “a legitimate interest in the assets of Wollschläger.”

Recapping to the week of August 2016, when Wollschläger announced the opening of insolvency, Sanistål’s share price in Copenhagen jumped by almost 5 %, closing at 86 Danish Krones per share. A case for the efficient market?

***

The week ending on the 22nd of September 2016 was a feverish one for Sanistål. Asset acquisition of a competitor of Wollschläger’s size is a decision that must not have been easy for Lund.

On Saturday, the 23rd of September, Lund officially announced that Sanistål was working to take over selected activities and employees from Wollschläger. He wrote that negotiations had been held. Due diligence was pending. He expected the talks to conclude by the 1st of October 2016. After this official announcement, Sanistål’s share price climbed even further, from 85,50 DKK to 89,50 DKK.

Wollschläger was in private hands. Sanistål is a public company. It is impossible to know, maybe even illegal, to share at what price Frank was willing to sell his entire company, or a part of it. What we can estimate, nevertheless, is the price the market is willing to pay.

Since news of Wollschläger impeding failure at the beginning of August, and the announcement of Sanistål’s interest at the end of September, the market value of the latter increased by 10 million euros. Was the market pricing the value of Wollschläger (in Sanistål’s hands) or its failure? One cannot know for sure, but what happened next might give us a clue.

While regional papers in Bochum announced the rescue of the Wollschläger Group, Lund was still discussing the opportunity with the board. Should he acquire the entire company, invest on it, or purchase only assets complementing Sanistål’s business? Shall Lund save Wollschläger from insolvency or bet for its liquidation?

On Monday the 26th of September, smiles filled Wollschläger’s canteen. There was a genuine sense of relief among the employees. Maybe even euphory? Carsten might have confided the team that Frank had saved his company. In October, Sanistål would take over. The market in Copenhagen might have believed the same.

Sanistål’s M&A team was still going through the due diligence. With Wollschläger’s ownership complexity, it was hard to accurately value the company. It was maybe impossible. Time was running out.

The sun went down twice, and on Tuesday evening, the 27th of September, Lund placed a fateful call to Andres. After days of reviewing the transaction, Sanistål was withdrawing its intention to buy Wollschläger GmbH & Co. KG, contrary to Frank and Carsten’s expectations. The deal went down.

***

For someone of Italian ascendency, I am in no way superstitious. The number 13 is considered a lucky one in Italy. The last Wollschläger’s catalogue was the number 13. Sanistål’s official announcement, the number 13 of 2016, came on the 28th of September. The number 13 brought no luck for Frank Wollschläger.

Sanistål company had officially “abandoned negotiations to purchase activities from Wollschläger”. The letter had only two lines of text: “Due diligence has been carried out, and further negotiations have been conducted with the receiver. It was impossible to reach a satisfactory outcome, and the negotiations have therefore been terminated.”

In the few days after this announcement, the share price of Sanistål went back from 89,50 DKK to 85,50 DKK. The market might have been pricing the acquisition after all.

On the same day, the provisional insolvency administrator, lawyer Dr Dirk Andres, declared that “despite advanced talks, the investor decided against the takeover at short notice”. Without an investor, Andres could no longer administer Wollschläger GmbH & Co. KG. The die was finally cast.

***

When do you realise a dream is over? A dream of almost 80 years; a dream that went through generations and touched thousands of lives? I can only feel intense empathy for all the remaining loyal associates that went through the last months of the company. Liquidation followed.

When a limited liability company is liquidated, the liquidators must end the company’s current business, including collecting and paying outstanding debts of GmbH. Wollschläger stopped operations on the 30th of September 2016. Four hundred twenty of the remaining employees were terminated. It had been a tumultuous summer after a couple of turbulent years.

The history of Wollschläger started in 1937 in a garage in Danzig came to an end. It had survived a world war, the berlin wall, and the 2009 crisis. It did not survived Frank.

***

The liquidation brought still a couple of thrilling twists. The areal, where the new company headquarters should have been located in the Carolinenglückstraße 33, ended as a shared logistic centre used, among others, by J. W. Zander GmbH & Co. KG. The Zander Group is a booming electrical, sanitary, and heating distributor, family-managed in the 4th generation, founded in Essen in 1879. Old flames die hard.

Sanistål took over the Hamburg and Hanover offices, probably at a fraction of the price. At the time of writing, Max Schön GmbH, an industrial distributor founded in 1920, occupies both buildings. Max Schön has been part of Sanistål since 1995.

Wollschläger did what many companies have successfully done in the past. It financed his brand heavily, diversified his business, and invested in people. It still failed.

Frank never played the victim. He might have known that you give away your power if you play the victim.

Frank Wollschläger is an extraordinary character. Was he “too” remarkable? Or reckless? Or both?

 
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Further Read (all sources are in german language):

Simone Podieh: Alles für den Kunden

Alexandra Rüsche: Siegfried Hakelberg neuer Vertriebsleiter bei Mercateo

Martin Wocher: Das Ende einer Bochumer Traditionsfirma

Dirk Andres: In welchen Branchen die nächsten Pleiten drohen

Thomas Schmitt: Dänisches Handelshaus übernimmt Wollschläger in Bochum

WollschlaegerGroup: Erfolgsgeschichte Wollschläger

Andrea Schröder: Wollschläger: Investor zieht Kaufangebot zurück – 420 Mitarbeitern wird gekündigt

Industry Arena: Neue Metav hat überzeugt

Derwesten: Wollschläger-Gruppe aus Bochum hat Insolvenz angemeldet