VIPsight - 4th Edition 2017
COMPANIES
Volkswagen AG: No suspension of special audit
According to a Reuter´s report, Germany´s highest court has rejected a bid by Volkswagen to suspend the work of a special auditor appointed to investigate management´s actions in the “Dieselgate” scandal. In its request Volkswagen argued that the naming of a special auditor by a court violated its fundamental rights and asked for an injunction. While the judge panel stated that the complaint “is neither a priori inadmissible nor is it obviously ungrounded, it also added that the company had not convincingly made the case for an immediate decision. As a consequence, the special audit is likely to go ahead and shed some light on certain topics related to the “Dieselgate” scandal which could help shareholders to better understand what happened and what actions should be taken.
RWE AG: Small claim, big impact?
The Hamm Higher Regional Court decided to proceed with a Peruvian farmer´s case against RWE. At first glance this looks like a marginal issue, given the amount in question (17,000 EUR) and the early stage of the process. But the relevance of the decision might extend well beyond the issue under consideration. The farmer claims that RWE´s contributions to global warming were threatening his hometown and is asking for money to fund flood defenses he plans to install. RWE argues that under the German Civil Code a single emitter cannot be held liable for processes with a global impact such as climate change, due to the vast diverse sources and amounts of global greenhouse gas emissions from both natural and manmade nature, the climate´s complexity and its natural variability. At this point in time, this is no more than a court decision to proceed with a case. But given the reasoning for the decision, it might indicate a shift in the way German courts look at similar issues in the future.
Innogy SE: Changes to the executive board
On 13 December 2017, shareholders had to digest a profit warning by innogy. According to the news, profits for 2018 are expected below prior expectations, and even 2017 had to take a hit due to the persistently difficult market environment in the UK retail business. In light of the forecast reductions, the CEO Peter Terium stated: “We are a trailblazer of change. We do not wait to see what happens – we set trends.” A week later action followed, with the announcement of his resignation form the executive board with immediate effect. While Mr. Uwe Tigges will assume the position of CEO on a temporary basis, no decision on the succession has been taken yet. The supervisory board thanked Peter Terium for his successful work. At the same time, though, the announcement stated that the supervisory board welcomes in general the corporate and finance strategy pursued, but sees the necessity for greater emphasis on cost discipline and a more focused growth and investment strategy.
QIAGEN N.V.: Birds of a feather flock together
QIAGEN N.V. announced that it is transferring the U.S. listing of its global shares to the NYSE from the NASDAY market. The transfer is expected to become effective on or about 10 January, 2018. According to QUIAGEN, many companies, including several of its laboratory customers and pharmaceutical industry co-development partners are listed on the NYSE. The transfer is expected to provide greater visibility within the healthcare sector and expand the companies´ shareholder base. The announcement did not provide information about the role of the sponsor in this move.
Siemens: IPO of Healthcare unit planned for the first half of 2018
At the beginning of this month, Siemens announced the appointment of Jochen Schmitz as the new CFO of Siemens Healthiness, effective 1 December 2017, while the former CFO Thomas Rathmann will be leaving his position by mutual agreement.
What came along like a typical personality news later turned out to be an important milestone for the planned IPO of Siemens healthcare, which was announced on 29 November 2017. For the public listing, a new company (Siemens Healthiness AG) will be established. According to the news release, the legal prerequisites for the listing - which is planned for the first half of next year - have largely been fulfilled, and the global coordinators have been engaged.
Daimler AG – Reorganizing the dinosaurs´ administration
Daimler AG announced plans to strengthen the divisional structure in order to “better focus on changing requirements of markets and customers”. The plan is to create legally independent entities for the divisions Mercedes Benz Cars & Vans and Daimler Trucks & Buses. Hence, the holding Daimler AG would have three pillars, including the already legally independent Financial Services division.
This decision follows intense internal discussion regarding the protection of employee rights, resulting in the extension of the agreement on safeguarding employment until the end of 2029 (»Zukunftssicherung 2030«), increasing the funded status of pension obligations, and an extension of the common profit-sharing bonus of Daimler AG. The decision on the implementation of the new divisional structures still needs to be taken by the Board of Management and the Supervisory Board, while the shareholders´ approval may follow at the AGM 2019 at the earliest.
Oops, this looks like a good idea to reorganize the dinosaurs´ administration, but when do you plan to start working on the concrete challenges ahead of the company?
Südzucker: News about the European sugar market liberalization finally reached Ireland
If you ever wondered about the meaning of a claim like “we aim to provide our clients with innovative, timely and commercial ideas based on a fundamental knowledge and understanding of the companies we cover and the industries within which they operate”, a recent publication by Davy Research may provide an inside view.
Since several years, Südzucker did inform its shareholders about the implications of the sugar market liberalization. The topic has been widely discussed at the AGMs and in corporate publications. Hence, one could not really imagine that there still have been investors who were not yet aware of the facts and the related risks and chances. Wrong assumption, as it turned out, very wrong. Under the heading
Südzucker: “New playbook required as European sugar market liberalizes” an amazing story has been published recently by Davy Research. The surprising conclusion: “As such, we are entering a period of uncertainty for European sugar processors.”, and the recommendation: “We revise our sugar segment assumptions and consequently move our rating to ‘Neutral’ from ‘Outperform’”
This is a great story, but perhaps a few years too late. Or did I get something wrong here: innovative, timely, knowledge and understanding, etc.?
Bayer AG: Positive side effects of the Monsanto acquisition
With the Monsanto takeover by Bayer approaching the planned closing date, the interest begins to focus more and more on the details and side effects of the transaction. With assets to be divested in the volume of potentially more than USD 5 billion in order to win the approval of authorities for the deal, the stakes are high, and open questions need to be answered soon. Rumors are that BASF may be interested to acquire a package of seed and chemical assets from Bayer.
Following the mergers of the industry giants forming so called integrated businesses with seeds and agrochemicals under one roof, such an acquisition could be the last sustainable market entry for BASF. In all, eliminating strategic options looks like a potentially a very attractive side effect of the Monsanto acquisition for Bayer and shows the clever architecture behind this deal. Bayer also announced the sale of additional 9.4 percent of Covestro, realizing Euro 1.2 billion with this transaction. Please note that this transaction enhances Covestros´ outlook for a DAX entry, thus creating additional value for the shares remaining in Bayer´s pockets.