Unions to take legal action over Siemens' phone sale

BERLIN - German union leaders threatened to take legal action yesterday against Siemens over the sale of its loss-making mobile phone unit to the Taiwanese technology firm BenQ.

The electronics giant's mobile phone operation had been making losses of €1.5 million ($2.6 million) a day in the face of competition from Asian and European rivals.

Rumours of a sell-off had been rife for months. Germany's Spiegel-online nevertheless described the sale as a "heavy blow for the Germany economy".

Siemens said that under the deal it had agreed to take a 50m share in BenQ, which will retain the rights to the Siemens brand name for five years and supply phones to the German company for the same period.

The transaction cost Siemens 350m before tax. Klaus Kleinfeld, the chief executive, said: "BenQ and Siemens complement one another ideally ... We have found a sustainable perspective for our mobile phone business."

Siemens was recently described by Chancellor Gerhard Schroder's ruling Social Democratic Party as a "locust" company because of its allegedly anti-social hire-and-fire policies.

Union leaders at Siemens were unhappy about the way the deal had been handled.

Ralf Heckmann, the works council leader, said his union was proposing legal action against the board because of suspicion that the deal had breached insider trading rules.

"We only learned of the details through the media," he said. The unions were also concerned about 3,000 mobile phone jobs, of which 2,000 are in Kamp-Lintfort, in the state of North Rhine Westphalia, and the rest in Munich, where the headquarters will be.

Siemens insisted the deal guaranteed the survival of the Kamp-Lintfort plant for two years. Workers there had agreed to increase production by five hours a week without a pay rise last year.

BenQ, which makes most of its products for other vendors, was founded under another name in 1984 and is a sister of the computer maker Acer.

KY Lee, BenQ's managing director, said: "The transaction has provided us with an excellent workforce, sales channels and a firm customer base."

Siemens shares rose 2.3 per cent yesterday. It said it hoped to complete the deal by September.

- INDEPENDENT