Preussag:From state-owned company to private property

The subscription period had only just begun when demand already exceeded the supply of new shares:On March 24, 1959, the citizens of the Federal Republic were able to subscribe to Volksaktie for the first time. Workers, housewives and students were interested in papers from the state-owned Prussian mining and metallurgical company, today's TUI AG in Hanover. "Victory of the People's Share" was in the newspapers. The IPO of Preussag - that's the official name since 1964 - wasn't the most spectacular, but it was the first partial privatization of a state-owned German company by issuing people's shares.

"Prosperity for all - property for everyone"

After the war, various companies organized under private law, mostly industrial companies, which had previously served mainly armaments and wartime purposes, fell to the Federal Republic. The federal government wanted to part with these in the 1950s. It should be the task of the state to guarantee the regulatory framework for the economy - but it should not be entrepreneurial itself.

There was also a socio-political component:the government increasingly set itself the goal of promoting wealth accumulation among employees. "Prosperity for everyone - property for everyone" was the motto of Economics Minister Ludwig Erhard (CDU) in 1957, the year of the federal elections. He announced a new policy of building wealth through workers' participation in industrial productive capital. The government set up a separate department for the privatization of federal property:the Federal Ministry of Treasury under Hermann Lindrath.

First "Volks-Aktiengesellschaft" in Germany

The federal government had actually intended to privatize the Volkswagen factory first - but due to delays, including the unresolved question of ownership at VW, it was ultimately Preussag that was made the first "Volks-Aktiengesellschaft" in Germany. In addition to the political considerations, however, it was also about raising capital for a group that was going through a difficult restructuring phase and needed money for investments.

The company was founded in 1923 as a Prussian mining and metallurgical company. Among other things, it bundled the mining operations of the Prussian state, including hard and brown coal mines, potash mines, saltworks and ore mines. These were now organized privately, but were still state-owned. After the Second World War, as part of the former Nazi war economy, the company was initially placed under Allied administration before it became part of the Federal Republic and a reorientation began.

Reservations from many quarters

Resistance to the privatization efforts did not only come from Preussag's parent company, United Electricity and Mining Company (Veba) - the workforce, the works council and the trade unions also had reservations about the sale of state property. They were supported by the SPD. Nevertheless, the federal government pressed ahead with the privatization policy, and as early as the end of 1958 it presented a draft.

As a future line of economic policy, it was stipulated that state entrepreneurial activity was incompatible with a social market economy - this was only justified if important public interests were affected, which was not the case with Preussag or other companies. Finally, in January 1959, the Preussag supervisory board approved the capital increase from 75 million to 105 million Deutschmarks required for the privatization.

Strict requirements and restrictions

In the meantime, the responsible ministries had significantly modified their plans for the issue of Volksaktien and had moved away from extensive privatization. Now it was no longer the majority of shares, but only the newly created capital of 30 million Deutschmarks in 300,000 shares at 100 Deutschmarks each that were to be listed on the stock exchange. This corresponded to a share of only 28.6 percent in Preussag's new share capital. Politicians hoped to raise more than 40 million Deutschmarks in fresh capital for the company.

There were strict requirements for the group of shareholders. In addition to Preussag employees, only people with an annual income of a maximum of 8,000 Deutschmarks should be able to subscribe to shares, for married couples there was a limit of 16,000 Deutschmarks. In addition, the number of shares was limited to five, ie a total of 500 Deutschmarks. The issue price was set at 145 Deutschmarks.

Advertising campaign in radio and newspapers

What followed was a large-scale advertising campaign in daily newspapers, radio and television. The response to this ultimately exceeded all expectations, and the creation of the first "Volks-Aktiengesellschaft" became a success for both the federal government and the company, as the authors Bernhard Stier and Johannes Laufer wrote in their book "Von der Preussag zur TUI - Describe the ways and changes of a company 1923-2003". The 300,000 shares available were not nearly enough to meet the demand.

After the subscription period expired on March 31, 1959, more than 215,000 people had applied for almost the entire Preussag capital. As a result, the allocation was limited to four instead of five shares and a maximum voting right was introduced to avoid concentrations of power. After the Volksaktie was issued, 77.6 percent of the Preussag capital was in private hands, and only 22.4 percent remained with Veba and thus with the state. This was what the federal government actually wanted to avoid after modifying the original plans - extensive privatization, in which the state even lost its blocking minority.

From Preussag to TUI

The privatization was completed in 1970 with the exit of the state-owned Veba. To date, the company, which has meanwhile radically changed into a shipping and tourism group and was renamed TUI AG in 2002, has a not inconsiderable number of private investors - according to the company an estimated 115,000.

The partial privatization of Preussag AG, two years later of Volkswagen AG and finally in 1965 of Preussag's parent company Veba also attracted a great deal of attention abroad. They stood for the sale of state property to broad sections of the population and for employees to participate in their companies. After all, 4.5 million Germans became small shareholders at the time. The idea of ​​the people's share first experienced a renaissance in the 1990s with Telekom's IPO.