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Rights issue set to give Merckle family smaller role

HeidelbergCement, the company in which Germany's Merckle family is a substantial shareholder, has announced a huge capital increase equivalent to 50% of its entire share capital.

It is thought that the deal will lead to the Merckles selling a large part of their shareholding to pay back the debt incurred by VEM, the family holding company. VEM's decline lead to the suicide of patriarch Adolf in January this year (click here to read our coverage of the story). A debt moratorium on VEM was recently extended by its banks.

Adolf's sons, Ludwig and Tobias, sit on HeidelbergCement's supervisory board, which approved the capital increase over the weekend. The family also owns Phoenix Pharmahandel, Ratiopharm and Kässbohrer.

Although one of the world's largest manufacturers of building materials with revenues of approximately €14 billion, HeidelbergCement was forced into a major refinancing initiative in June this year to ease the company's debt burden.

Group turnover declined by 22.5% in the first half of 2009 even though it reduced its debt in the second quarter by €774 million to €11.3 billion. Bernd Scheifele, non-family chairman of the Managing Board, said the company was returning to a "cash is king" initiative.

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