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VIPsight

Corporate Governance – portrayed in the individual cultural and legal framework, from the standpoint of equity capital.

VIPsight is a dynamic photo archive, sorted by nations and dates, by and for those interested in CG from all over the world.

VIPsight offers, every month:
transparent and independent current information / comments / facts and figures on corporate governance locally and internationally,

  • written by local CG experts,
  • selected and structured by the Club of Florence,
  • financed by its initiator VIP and other sponsors with a background of “Equity and Advisory” interests.
     

VIPsight International


Article Index

 

 

ACTIONS CORNER

 

ADVA Optical Networking SE: Sometimes it all depends on the right Deadline

On the equity market, 1 plus 1 does not always equal 2, even if the economical logic speaks for a measure. A good example of this is the business combination of ADVA and ADTRAN. As early as August 2021, the two companies announced their intention to combine their businesses to form a global, scaled end-to-end fiber networking solutions provider. The combination is expected to expand the product offering and to strengthen the position as a global fiber networking provider with combined revenue of 1.2 Bn USD. According to the announcement, the measure is expected to create significant value for the shareholders of both companies, with approximately 52 Mio. USD in pre-tax annual cost synergies realized within two years post-closing, driven by identified supply chain efficiencies and operating model optimizations.

The companies were combined under a new holding company pursuant to an all-stock exchange offer for all of ADVA´s outstanding shares. Under the terms of the offer, each share could be exchanged for 0.8244 shares in the new holding company. The offer was equivalent to 14.98 USD per ADVA share based on ADTRAN´s 3-month VWAP as of August 27, 2021. This represented a premium of 22%, an equity value of 789 Mio. USD, and an enterprise value of 759 Mio. USD for an implied value of 1.3x LTM revenue. ADTRAN shareholders received shares in the holding company on a one-for-one basis. Assuming a tender of all ADVA shares, ADVA shareholders would have received 46% of the equity of the combined company, while former ADTRAN shareholders would own approximately 54%.

The new holding company Acorn HoldCo published the offer on 12 November 2022. At the time, Acorn had already secured an irrevocable undertaking from the largest shareholder of ADVA, representing 13.7% of the total share capital of ADVA, to tender its shares in connection with the offer. Despite these good start conditions, the minimum acceptance threshold for the offer to acquire all non-par value bearer shares in ADVA had to be lowered from at least 70% to 60% on January 10, 2022, and the acceptance period was extended from 12 January to 26 January.

The bidder informed that as of the end of the initial acceptance period on 26 January 2022, the voluntary public takeover offer had been accepted by more than 60% of all shares of ADVA Optical Networking SE entitled to voting rights existing as of 31 October 2021, thus exceeding the required minimum acceptance threshold.

That was a happy ending for the offer, considering that the total number of shares tendered during the initial acceptance period amounted to 30,715,845 shares, which corresponds to approximately 59.71% of all outstanding ADVA shares as of 30 November 2021.

 

DIC asset AG: Why take everything when half is enough?

The consolidation in the German real estate industry is still running at full speed. A few weeks ago DIC asset added an interesting facet with its launch of a voluntary public partial tender offer of its wholly-owned subsidiary DIC Real Estate Investments GmbH & Co. KGaA to shareholders of VIB Vermögen AG. DIC is offering to purchase up to 6,500,000 shares of VIB from VIB shareholders for a cash consideration of 51.00 EUR per share.

The offer price represents a premium of 34.7% compared to the stock price before the start of share purchases by DIC asset, and approximately 94% compare to the last reported EPRA NTA, respectively. The acceptance period for the offer commenced with the publication of the offer document on 9 February and is expected to expire on 18 March 2022.

DIC asset already owns 11.5% of the VIB shares. The completion of the tender offer is, among other things, subject to the condition that the minimum acceptance rate of 30.0% of all outstanding VIB shares is achieved. DIC had already secured approx. 11.5% of the VIB shares before the publication of the offer, and was thus already the largest known individual shareholder. With the completion of the offer, CIC asset expects to hold around 51% of the VIB shares and to fully consolidate VIB in its consolidated financial statements.

 

alstria office REIT-AG:

Low interest rates and the prospect of real estate price increases make real estate stocks particularly attractive for buyers. This applies in particular to the German market with numerous listed real estate companies.

However, the situation is currently changing at a rapid pace. For example, alstria office REIT-AG informed its shareholders in November 2021 about an investment agreement that it signed with Alexandrite Lake Lux Holdings S.a.r.l., a company controlled by real estate private funds of Brookfield Asset Management, according to which Brookfield shall make a voluntary public takeover offer for all of the outstanding in alstria that it did not own at the time, for 19.5 EUR per share in cash.

The offer was successful. On 12 January 2022, the bidder announced that the total number of shares acquired (including shares acquired by persons acting jointly with the bidder) amounted to 89,904,173, representing 50.5% of the issued share capital of alstria office REIT-AG. These shares and voting rights in alstria are attributed, inter alia, to Brookfield Asset Management Inc. to the effect that, after settlement of the takeover offer, Brookfield owns indirectly more than 50% of the voting rights and the shares of alstria.

This makes the list of real estate stocks with a high market cap a little shorter again. A replacement is provided, however, because alstria will be replaced by Daimler Truck in the M-DAX.

 

Delivery Hero SE: Wellcome to the real World

This was more than just a beautiful dream. Investors loved Delivery Hero – modern, innovative, disruptive, efficient, and a fast-mover growing through a seemingly endless stream of acquisitions. An important milestone on this path was the announcement of the acquisition of the majority in Glovo at the end of December 2021.

Delivery Hero has been an investor in Glovo for several years and held an interest of approx. 44% (on a non-diluted basis) in Glovo by the end of 2021. On 31 December 2021, the company signed an agreement with shareholders in Glovo to acquire an additional 39.4% stake in Glovo in exchange for Delivery Hero shares, making Delivery Hero the majority shareholder after the closing of the transaction, which is expected to occur in the second quarter of 2022. The remaining Glovo shareholders will be able to adhere to the agreement before the closing. In exchange for the Glovo shares, Delivery Hero will issue its own shares to the sellers at a fixed exchange ratio the implies a GMV multiple valuation of Glovo in line with Delivery Hero´s current trading levels.

Glovo has a complementary footprint to Delivery Hero, operating in over 1,300 cities in 25 countries across Europe, Central Asia, and Africa. Glovo connects approximately 15 million active users annually with 70,000 monthly active couriers and 130,000 monthly active partners, and approximately 800 Mio. EUR in revenue for the year 2021. Glovo shall continue operations with their existing brand and platform under their current management team, but the two companies plan to leverage shared technology to further improve efficiencies and accelerate product development.

The announcement sounded like a continuation of the previous success story. But the shine didn´t last long. The majority takeover is a logical step in Delivery Hero´s strategy. But another message announced a few weeks later seems to have been even more important. Following a successful business year 2021, Delivery Hero expects to reach a positive adjusted EBITDA for its platform business for 2022. Does that sound good? At least not in everyone´s ears. The good news draws attention to the fundamental earnings power of the business. Some investors had confused sales with profits in the past. That can sometimes happen. The knowledge gained regarding the planned earnings improvement resulted in a sharp slide in the share price. Time to think about the business model?