Grundig Collapses Into Bankruptcy

Grundig, the consumer electronics group that helped drive Germany's post-war economic miracle, yesterday collapsed into bankruptcy. A potential Turkish saviour abandoned takeover talks last week.

The latest in a growing line of German corporate failures, Grundig vowed to stay in business and retain as many of its 3,800 workers as possible after a Nuremberg court appointed an administrator. It employed 10 times as many people in the late 80s.

Its failure, after almost 20 years of failing to overcome fierce competition from low-cost Asian rivals, prompted speculation that Beko, the Turkish group, or Taiwan's Sampo, which broke off partnership talks earlier this year, would re-enter negotiations for a takeover.

Grundig, once Europe's biggest radio producer and supplier of the first TV sets to post-war German consumers, said it was still "in intensive negotiations with possible investors" and had the financial backing of its bankers despite reports that they had refused to extend €200m (£143m) of credits.

Anton Kathrein, the majority shareholder with an 89% stake, has said he does not expect Grundig to go under and that the brand name, symbol of German quality at premium prices, is worth €500m alone.

Beko, which already makes about 400,000 TV sets a year for Grundig in Istanbul, is said to be ready to step back in, possibly with a view to acquiring the brand or parts of the business such as the small satellite components plant in Britain without taking on all of its heavy debt, including pension liabilities.

Founded as a radio repair and testing business by Max Grundig in 1945, the group lost €150m in 2001 after extensive but costly forays into new consumer segments such as cordless phones. It is seen as too small on the global scale and too expensive as even a niche player.

Last week it made Eberhard Braun, a well-known company doctor who failed last year to turn around Fairchild-Dornier, the bankrupt aircraft-maker, its seventh chief executive in 11 years after his predecessor lasted less than two years in office - evidence of its growing managerial and financial plight.

Grundig, which also makes video and DVD players, has been kept afloat by a €45m loan from the Bavarian government, but its books are said to be "catastrophic".