Jan. 6 (Bloomberg) -- The billionaire Merckle family’s HeidelbergCement AG dropped in Frankfurt trading after the suicide of Adolf Merckle increased the likelihood the company will be sold to creditors.

The building-materials supplier, based in Heidelberg, slid 6.2 percent to 31.26 euros. The Merckles also own stakes in drug wholesaler Phoenix Pharmahandel AG and generic drugmaker Ratiopharm GmbH, both closely held.

Investments in carmaker Volkswagen AG as well as HeidelbergCement’s 70 percent slump last year battered Merckle’s VEM Vermoegensverwaltung GmbH, forcing the investment arm into survival talks with banks. The 74-year-old Merckle sought a bridge loan to rescue VEM after betting on a drop in Volkswagen shares, when they later gained on Porsche SE’s moves to take control of its rival.

“It remains to be seen whether the shareholding goes to the banks or stays with the family, albeit the latter seems more difficult now,” said Tobias Woerner, an analyst at MF Global Securities, referring to HeidelbergCement. “The banks have been in the sector before, and may take it on and wait for a recovery. Given the high level of debt we may see a piecemeal breakup.”

Merckle committed suicide, “broken” by financial woes, his family said in a statement today. He was hit by a train yesterday near his hometown of Blaubeuren, southeast of Stuttgart, Die Welt newspaper reported. VEM owed about 5 billion euros at the end of last year, people familiar with the matter said on Dec. 22.

Refinancing Continues

The death of the family head, whose estimated $9.2 billion fortune put him 94th on Forbes’ list of the world’s richest people, doesn’t have any impact on the refinancing process, VEM said.

Merckle used loans to the family’s Spohn Cement GmbH investment unit in 2005 to gain control of HeidelbergCement and the German cement maker paid tribute to him in a separate statement, lauding his role in building up the company.

Merckle in mid-2007 paid $18 billion to add British aggregates supplier Hanson Plc. At the time, it was the biggest- ever takeover in the building-materials industry.

The purchase saddled the company with debt, including a 5.5 billion-euro credit loan maturing in May 2010. Moody’s Investors Service last month cut its rating on HeidelbergCement to Ba3 with a negative outlook, citing refinancing needs, a market slowdown and the possible financial problems of the major shareholder.

Drug Holdings

A divestment of Ratiopharm would coincide with the sale of rival generic-drug maker Actavis Group hf, the Iceland-based company controlled by billionaire Thor Bjorgolfsson.

Ratiopharm, founded in 1973, was Germany’s first generic- drug company. It sells more than 750 versions of branded medicines, the most prominent of which is a copy of Bayer AG’s original aspirin painkiller. Based in Ulm, Germany, it employs about 5,400 people and had 1.8 billion euros in 2007 sales.

Merckle borrowed 415 million euros from Phoenix in an attempt to plug the losses at VEM, also leaving the drug wholesaler in need of immediate financing, two people familiar with the situation said on Dec. 22.

Today’s drop left HeidelbergCement with a market value of less than 4 billion euros.

“HeidelbergCement has some of the best positions in the industry,” said MF Global’s Woerner. “It was the debt coming with the Hanson acquisition in context of the credit crunch, which put it under such financial strain. From a human perspective the outcome is very regrettable, albeit I hope that there will be a good ending for the employees of the group.”

To contact the reporter on this story: Tim Barwell in London on tbarwell@bloomberg.net

Last Updated: January 6, 2009 12:52 EST