The Locusts

Earlier this year KKR purchased over 90% of the outstanding equity of WMF, a south German tableware manufacturer, founded in 1853 in Geislingen an der Steige, Germany, by the miller Daniel Straub and the  Schweizer brothers.

On August 21, 2014 WMF announced that the Group business performed at a stable rate in first-half 2014 achieving a gross revenue of EUR 462.6.  Overall revenue grew by 3% and the realised operating profit (EBIT) increased to EUR 27.6 million in comparison with EUR 17.7 million in the prior year.

On August 28, 2014  Buyout group KKR said it had obtained more than 90 percent of WMF's share capital, putting it on track to gain full control of the German cutlery and coffee-machine maker and delist it.

KKR invested 586 million Euros.  It announced that it intends to find savings of 30 million Euros a year requiring the firing of hundreds of employees and the likely divestiture of some parts of the business.

There has been a lot of discussion in Germany since the financial crisis focusing on the so-called "locusts" of private equity. 

The thinking is that these financial investors are only concerned in returns.  They represent no social value.  They don't possess a moral compass and have no compunction in destroying companies and the communities that rely upon them. 

They raise funds with the stated goal to find companies that are not maximising their potential, purchase them, and through either divestiture or cost cutting, a euphemism for cutting employees, maximise the return and then sell the more valuable company on, often to another financial investor.

This is the hard end of capitalism.

It is why there is a need for regulation.







30 Millionen Euro will der neue Eigentümer KKR jährlich sparen, hunderte von Arbeitsplätzen abbauen

Wie funktioniert das Ganze? Ein Finanzkonzern wie KKR leiht sich Geld, etwa bei Banken oder Pensionskassen, um einen Fonds zu gründen. Damit kauft er Firmen wie die WMF. In nur wenigen Jahren werden die Unternehmen auf Erfolg getrimmt. Durch Verkauf einzelner Sparten oder den Abbau von Arbeitsplätzen. Das Ziel: mehr Profit. Dann wird die Firma weiter verkauft, der Fonds aufgelöst und die ursprünglichen Geldgeber werden ausgezahlt.