Tom Metcalf & David de Jong – Bloomberg Feb 21, 2013
Roche Holding AG (ROG), the Basel, Switzerland-based drugmaker that manufactures the world’s best- selling cancer treatment and reached a five-year high this week, has minted at least 12 Swiss and German billionaires. Seven have never appeared individually on an international wealth ranking.
The dozen billionaires, who are drawn from the Engelhorn family of Germany and Switzerland’s Hoffmann-Oeri clan, have a combined fortune valued at more than $35 billion, according to the Bloomberg Billionaires Index.
Eight of the medicine moguls are great-grandchildren of Roche founder Fritz Hoffmann-La Roche, who created cough-syrup maker F. Hoffmann-La Roche & Co. in 1896. Hoffmann’s heirs control at least half of Roche’s voting rights and a 9.3 percent economic interest in the company, according to the company’s annual report.
“The family avoids the spotlight,” Martin Voegtli, a Zurich-based analyst with Kepler Capital Markets SA, said by phone. “On the operational side of things their involvement is limited, although they are fully committed to the business.”
The hidden Hoffmann billionaires — Sabine Duschmale-Oeri, Andreas Oeri, Catherine Oeri, Beatrice Oeri, Andre Hoffmann, Vera Michalski-Hoffmann and Maja Hoffmann — have avoided being identified by holding their Roche stakes in a voting pool created in 1948 to maximize the family’s control over the publicly traded company.
Roche generated $48.5 billion in sales in 2012. Its shares are up 13.6 percent year-to-date.
The size of one individual stake was revealed in 2011, when Maja Oeri, Hoffmann’s great-granddaughter, transferred her shares out of the family voting bloc. After her departure, Roche disclosed she held 8 million shares — a 0.9 percent economic interest in the company. She probably inherited the shares in 2003, when her mother, Vera Oeri-Hoffmann, died.
According to the Bloomberg ranking, which applies Swiss inheritance law to shareholding information listed in Roche company filings, Maja Oeri’s four siblings — Sabine Duschmale- Oeri, Andreas Oeri, Catherine Oeri and Beatrice Oeri — also inherited about 8 million shares from their mother.
“Swiss inheritance law states all children will get an equal share of inheritance, provided there is no will to override it,” Balz Hoesly, a Zurich-based inheritance lawyer at MME Partners said by telephone. “A compulsory share for each child is enshrined in law.”
Vera Oeri-Hoffmann’s brother, Lukas Hoffmann, left the family pool in 2004. His children — Andre Hoffmann, 54, Vera Michalski-Hoffmann and Maja Hoffmann — remained listed as shareholders on the company’s annual report and had their father’s shares added to their holdings from the point of his departure. Today, their combined stake is valued at $9 billion. They control a quarter of the company’s voting rights.
The shares owned by Andreas Oeri, 63, Maja Oeri, Sabine Duschmale-Oeri and Catherine Oeri are valued at $7.2 billion. Beatrice Oeri, who sold her stake back to the family in 2009, has a net worth of $1.3 billion, according to the ranking.
Maja Oeri declined to comment on her fortune through Catherine Schott, a spokeswoman for her Schaulager art foundation. Beatrice Oeri did not respond to phone messages and e-mails sent to the Bird’s Eye Jazz Club in Basel that she helps run. Andreas Oeri did not respond to messages sent to the doctor’s office where he practices. Sabine Duschmale-Oeri and Catherine Oeri could not be reached for comment.
The members of the Hoffmann family declined to comment on their net worth in an e-mailed statement. Eight of the 12 billionaires’ ages couldn’t be confirmed.
Daniel Grotzky, a Roche spokesman in Basel, declined to comment on the company’s shareholders beyond what is disclosed in its financial statements. Bruno Dallo, a former spokesman for the family pool at Scobag Privatbank AG in Basel, did not respond to e-mail and phone requests for comment.
In 1998, Roche paid $10.2 billion to acquire Bermuda-based Corange Ltd., which controlled German diagnostics manufacturer Boehringer Mannheim GmbH and 84 percent of DePuy Inc., a Warsaw, Indiana-based orthopedics maker. The transaction made billionaires of four members of Germany’s Engelhorn family.
Curt Engelhorn, 86, owned 37.3 percent of Corange, according to a March 1998 document filed with the U.S. Securities and Exchange Commission. His cousin, Christof Engelhorn, held 22.3 percent, as did Peter Engelhorn’s widow, Traudl, 86. Cousin Christa Gelpke had 18 percent.
Curt Engelhorn took control of Boehringer Mannheim in 1960. Fourteen years later, he engineered the purchase of Indianapolis-based Bio-Dynamics Inc., which owned DePuy. The four family members sold both companies more than two decades later.
Christof died in 2010, leaving his estate to his widow, Ursula Engelhorn. Her fortune is valued at $3.9 billion, according to the Bloomberg ranking, as is Traudl’s. Curt Engelhorn has a net worth of $5.3 billion, and Christa Gelpke controls a $3.1 billion fortune.
“Frau Traudl Engelhorn-Vechiatto and her offspring have a strong attitude as a patron in fostering young musicians and promising scientific high-potentials,” said Herwig Brunner, a spokesman for the Weilheim, Germany-based, Peter und Traudl Engelhorn-Stiftung, in an e-mail. He said Bloomberg’s net worth calculation was “too high,” without commenting further.
Sacha Wigdorovits, a spokesman for Ursula Engelhorn’s Bermuda-based Butterfield Trust Ltd., and Karen Pettifer, a spokeswoman for Curt Engelhorn, declined to comment by e-mail and phone. Gelpke couldn’t be reached for comment.
The Hoffmann and Oeri families still control their family company through so-called bearer shares, securities that are not tracked or registered by the issuer. Roche has 160 million bearer shares outstanding, according to the company’s annual report. At least half of the shares are held by the families, and another third is controlled by Basel-based competitor Novartis AG. (NOVN)
“Bearer shares do not contain the name of the shareholder and are not registered, with the possible exception of their serial numbers,” an Organization for Economic Co-operation and Development report said in 2007. “Bearer shares thus have a very high level of anonymity.”
Roche’s articles of incorporation mandate that only bearer shares have voting rights. Roche’s 702.6 million non-voting shares make up more than 80 percent of the company’s economic equity.
The voting pool was established to ensure the family’s influence over Roche endured. It included provisions regarding voting rights, representations to the company and restrictions on disposal of the bearer shares, according to a 2009 statement by the bloc.
Such agreements help to coordinate and sustain family interests, according to Franco Taisch, a professor of business law at the University of Lucerne in Switzerland.
“They facilitate voting in a bloc and help uphold the needs of the family,” he said.
Maja Oeri’s departure in 2011 caused the family voting pool to lose its Roche voting majority, sparking speculation that Novartis could mount a takeover attempt. At the time she transferred her shares, Oeri said in the statement that she was committed to the company’s continued independence.
Novartis views its current holding in Roche as a strategic investment, company spokesman Eric Althoff said by e-mail.
Geneva-based Andre Baladi, who co-founded the International Corporate Governance Network, which represents institutional investors with more than $18 trillion in assets under management, said Roche would remain in the hands of the families as long as they want it to.
Novartis won’t take over Roche, Baladi said in a phone interview. “Although the family pool doesn’t have the majority any more, that doesn’t change the picture at all,” he said. “You cannot take over Roche, it’s practically impossible.”