TWO of Germany's biggest and best-known industrial companies locked horns yesterday when Krupp Hoesch, the steel and engineering group, announced a hostile takeover offer for its rival Thyssen.

If successful, the offer, valuing Thyssen at DM13.6 billion (£5.2 billion), would create one of the world's biggest steelmakers with sales of more than DM63 billion, placing it ahead of the European market leaders Usinor-Sacilor of France and British Steel.

But Thyssen, about 80 per cent of whose shares are widely held, is expected to fight vigorously to preserve its independence.

Although hostile bids are extremely rare in Germany, Thyssen wasted no time in adopting aggressive language. It criticised Krupp's "wild west" tactics.

It said it had an array of "weapons" to defend itself, including political defences, suggest it would look to the Social Democratic Party-controlled government of North Rhine-Westphalia for support.

It urged shareholders to take no action at this stage.

Thyssen can also count on strong emotional support. Mr Gerhard Cromme, chairman of Krupp and the driving force behind the bid, was protected by riot shields as he faced Thyssen workers at the Krupp headquarters yesterday to deny that his plans would throw tens of thousands out of work at a time of high unemployment.

Both companies, based in the industrial Ruhr area, have played leading roles in the country's economic and political history this century. They also helped arm the country in two world wars.

But they have faced hard times in the 1990s, as costs for German companies have made it difficult for them to maintain their global competitive positions.