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FT.com / Home UK / UK - Siemens appoints Merck's No 2 as new chief

Siemens appoints Merck's No 2 as new chief
By Richard Milne in Frankfurt and Christopher Bowein New York

Published: May 21 2007 03:00 | Last updated: May 21 2007 03:00

Siemens, Europe's biggest engineering group, yesterday ended weeks of leadership confusion by naming Peter Löscher, the number-two manager at US drugs group Merck, as chief executive.

Mr Löscher, 49, an Austrian with extensive experience in the pharmaceuticals industry, takes over on July 1 as the German conglomerate deals with a corporate bribery scandal.

The scandal last month caused the resignations of the chief executive and chairman.

The appointment means the top two officials at the industrial group will be drawn from outside Siemens for the first time since it was set up in 1847.

Gerhard Cromme, the new supervisory board chairman, believes Siemens needs a "new start" to overcome the escalating corruption investigations by European prosecutors and theUS Securities and Exchange Commission. Mr Löscher, who has held senior posts at Hoechst, Amersham, General Electric and Merck but has never been chief executive, said it was an "honour" to lead Siemens.

"I know Siemens as one of the world's most foremost corporate addresses and as a company with a rich tradition and strong foundations," he said.

Siemens investors are likely to react positively to the end of uncertainty at the top and to the speed with which he will start.

Ben Uglow, analyst at Morgan Stanley, said: "The timing will be well received by the market.

"But the candidate himself is neutral. He has lots of experience in medical technology but that is only one of 11 divisions. He has also never run a major company." Restructuring Siemens' sprawling lightbulbs-to-power-stations operations is investors' main demand.

Mr Löscher has some reorganisation experience through the break-up of Hoechst, the former pharmaceuticals and chemicals group, when he was head of corporate planning.Merck

IG Metall - the main trade union at Siemens, holding nearly half the supervisory board seats - welcomed his appointment after meeting him at the weekend.

"We believe that Löscheris well placed to solve the leadership crisis and lead the company into calm waters again," it said.

Mr Löscher's main initial task will be to implement a strict principle of zero tolerance of corruption, people close to the supervisory board said.

Copyright The Financial Times Limited 2007