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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

VIPsight - 2nd Quarter 2021




BASF SE: Waiting for better Times to come

With the merger of Wintershall Holding GmbH and DEA Deutsche Erdöl AG in May 2019, a leading European natural gas and oil company was formed. According to the plans published those days, Wintershall DEA should not only be a major player in the energy market, but also take its place in the capital market. However, placing shares in the market requires favorable conditions for such a move. Therefore, the current shareholders BASF and LetterOne have decided to postpone the IPO to a later point in time. So far, the IPO was envisaged for the second half of 2021, subject to market conditions.

BASF explained that while oil and gas prices at the spot market as well as at the shorter end of the forward price curve have recovered considerably, this improvement is not yet fully reflected in the forward-looking broker consensus assumptions. In addition, market valuations of oil and gas companies have for various reasons not again reached the level the shareholders expect to kick off the IPO.

Good things take time, as they say. Strategically, the IPO stays in the pipeline, but the tickets should be expected to become more expensive.


CureVac: Dead Cat bouncing?

Some years back a wave of corporations from China flooded the German and American stock exchanges. These companies had glorious business prospects in their far away home country, cleverly constructed but insufficient corporate governance structures, and enthusiastic investors without a clue about the business in common. This story is all history now. The swamp bubbles from China have burst, the money is gone, and investors have learned who to trust and who not. Or have they already forgotten this lesson?

Things are completely different at Tübingen-based CureVac N.V. The business is carried out in Germany, and the choice of the American capital market for share placements was probably due to the special competencies of American retail investors in the field of biotechnology. After all, the company is a “global clinical-stage biopharmaceutical company developing a new class of transformative medicines based on messenger ribonucleic acid”. And the Dutch N.V. legal form is a forward-looking choice for German companies that want to become more flexible in meeting the changing requirements of a challenging business environment. 

Unfortunately, a few days before this year's annual general meeting, it turned out that the vaccine developed by the company was not able to demonstrate the desired test results. This fact and the resulting fall in the share price worried shareholders who had not yet understood the company's demanding business model. One would have thought that the AGM would be the ideal forum for the management to educate investors about the longer-term perspective of their investment in this company.

But far from it, shareholders were not even allowed to ask questions at the meeting. Instead, the surprised audience was told that all questions had already been answered with the management presentations. Can we conclude that this is a new form of artificial intelligence which no longer even tries to hide its own shortcomings? Malicious tongues referred to the company´s Shareholder Dialogue Policy document: “The Management Board and the Supervisory Board shall provide the General Meeting with information requested by the General Meeting, unless this would be inconsistent with an overriding interest of the Company.”


Volkswagen AG: From Ohio to the Rest of America

Perhaps you thought you had seen it all. At first, the news just trickled in, then it became a trickle, and suddenly everyone was talking about the Diesel scandal. It comes as no surprise that some people now think enough is enough.

Presumably, this also applies to the legal department at Volkswagen when they heard of the Ohio Supreme Court´s decision that federal law doesn´t preclude the state from suing the company for cheating on U.S. diesel emissions tests. The state of Ohio sued in 2016, accusing Volkswagen of conducting deceptive recalls and updates of diesel vehicles that were sold or leased in the state.

Basically, the Dieselgate and Volkswagen role in it are well known, and they have been dealt with on the Federal level in the US. The company paid more than 25 bn USD for claims from American owners, environmental regulators, states, and dealers, and offered to buy back vehicles. In legal terms, the Ohio decision opens the doors to a new world. The court ruled that the federal Clean Air Act did not pre-empt state law-based claims or prohibit state oversight after a vehicle or engine is sold.

According to Reuters, VW promised an appeal to the U.S. Supreme Court, saying the decision could create “regulatory chaos” and inhibit the U.S. Environmental Protection Agency´s ability to regulate emissions by giving state and local governments overlapping authority. Others are less concerned and are already sharpening their knives – Greetings from Monsanto.


Deutsche Bank AG: That could be handled better, too

There are topics for which the right bank immediately comes to mind. An old marketing slogan of Deutsch Bank goes: Trust is the beginning of everything. At the time, the marketing department probably thought more in terms of the result.

BaFin probably had similar thoughts recently and ordered that Deutsche Bank AG adopt further appropriate internal safeguards and comply with due diligence obligations, regarding regular customer reviews, to prevent money laundering and terrorist financing. This also applies to correspondent relationships and transaction monitoring.

To monitor the implementation of this measure, BaFin has expanded the mandate of the special representative appointed in an official note dated 21 September 2018. The special representative is to report on and assess the progress of the implementation.

Wouldn´t it be easier if everyone did what they should?





Buhlmann's Corner


The small virus and the big world

The Chinese Communist Party is affirming its claim to hegemony in Africa and Asia by generously handing out money. This is amicably called the Belt and Road Initiative (BRI). The catch is that the Chinese not only distribute the money generously, but also want it back with interest. When Sri Lanka could not pay (any more), the seaport Hambantota Port went to the communists from Beijing.

This little virus is causing 2/5 of the BRI projects to totter and half of them to face real hardship. One out of every two seats at the world's airports are closed, paying homage to the biological accident of history. At least that is the established political will. Even against many, often long-standing legal positions.

The electorate, who want to see football at their fingertips, is treated quite differently. 2/3 of the seats were officially released. One could get the impression that the fans were almost all standing and sitting in the front row, cheering loudly and maskless en masse. The question begs to be asked: Who in heaven's name decided this and with what justification?

483 million € is argument enough - that is the sum of the (publicly known) sponsors' contributions. While ANT is in custody in China, AliPay is allowed to perform at Wembley along with TikTok and even in Mandarin. A third of the sponsors were blessed in Beijing and advertise harmoniously together with Russia and Arab potentates. UEFA's rules are based on values such as human rights, international understanding and tolerance. Nevertheless, they are happy to receive money from Gazprom and SOCAR. Even though the energy company from Azerbaijan cancelled shortly before kick-off, SOCAR money had supported the war against Nagorno-Karabakh.

Corruption has not yet really got a grip on football, officials fly faster than anyone can learn to walk. Not only family-owned companies like Volkswagen, but also other listed sponsors should be questioned by their shareholders.Unfortunately, they are becoming more immune to shareholders and other viruses with each passing day.

The best example comes from Tokyo. While until a few weeks ago the GPIF (Government Pension Investment Fund) was the largest shareholder in the country, it is now Japan's central bank. Since 2010, it has been buying more and more shares from crisis to crisis, just like the European Central Bank (ECB) buys bonds. What is particularly bad about this is that the Japanese are buying ETFs so that no one can be held liable for ownership and responsibility.

The small virus shows and demonstrates the hypocrisy of global medical governance. There is no space for illusions …money money money









Deutsche Wohnen SE / Vonovia SE: „Eigenbedarf“ in Berlin

Far-sightedness is a quality that cannot be blamed on politicians in Berlin. It is therefore not surprising that after German reunification the city parted with the burden of a large housing stock as quickly as possible. Today, properties that were hastily sold then are now contributing to the creation of Europe´s largest residential real estate group. This is due to the signing of the business combination agreement regarding the merger of Deutsche Wohnen SE and Vonovia SE in May 2021. The combination will result in a real estate group with a projected combined market capitalization of around 45 bn EUR and a combined real estate portfolio of approx. 90 bn EUR. The more than 500,000 apartments represent a Germany-wide market share of nearly 2 percent.

Vonovia expects to realize synergy effects and cost savings of approximately € 105 million per year via the transaction by the end of 2024. The business combination shall be rental EBITDA yield and NTA per share accretive, and the credit rating remains strong since S&P has confirmed Vonovia’s current rating of BBB+ and Moody’s has initiated coverage with a rating of A3.

On 23 June, Vonovia announced the launch of its voluntary public takeover offer for all shares in Deutsche Wohnen, offering € 52 in cash for each outstanding Deutsche Wohnen share. The offer period is expected to end on 21 July 2021. Vonovia’s offer represents a premium of 15.6% on the closing price of Deutsche Wohnen on 21 May 2021, the last day of trading before the offer was announced on 24 May 2021, and of 22.4% based on the volume-weighted average price of Deutsche Wohnen shares over the last three months up to 21 May 2021.

The industrial logic is obvious. Whether the desired benefits can be realized depends on the political climate, though. The hasty privatizations contributed to strong rent increases in Berlin. But as a side-effect of the merger, the city of Berlin can acquire 20,000 apartments for its own portfolio. No wonder local politicians are happy about this transaction.


Bayer AG: Stubbornness can be expensive

Gradually, the financial burden of the Monsanto acquisition is becoming visible to shareholders. A considerable part of this is due to the Roundup™ product group. You do not have to be an opponent of Monsanto to understand that. Here the numbers speak for themselves. And even today it is still not possible to predict how high the bill will be in the end. The main reason for this unfortunate situation is that despite all the efforts of the lawyers, Bayer has still not succeeded in reaching a workable agreement with the plaintiffs. Viewed from the perspective of the financial control room, this may come as a surprise. After all, there was a double-digit billion amount on the table.

Shouldn´t the money speak for itself? To resolve around 125,000 claims by Roundup™ users that tie the glyphosate-based product to non-Hodgkin lymphoma, Bayer offered to pay up to 9.6 bn USD, and to set aside additional 2.0 bn USD to be used towards future claims. Facebook users were flooded with adds in this respect and know this part of the story from the lawyer´s marketing departments. Effectively, this looked like a pure cash transaction. What is more, you can hand in the change for the transaction at the next store around the corner, because that's where Roundup™ still sits on the shelf, ready to be bought by retail customers.

So here´s the local view: According to Reuters, the District Judge Vincent Chhabria is said having stated: "Bayer is a massive wealthy company and it continues to make money off Roundup sales." Which is why he then refused to bless the deal that had already been negotiated.


Air Berlin PLC i.I. / Deutsche Börse AG: Brexit throws everything upside down

Little is known about some consequences of the Brexit. Air Berlin´s insolvency administrator recently added an interesting feature.

Let´s start with a legal effect of the Brexit. According to the insolvency administrator, the withdrawal of the United Kingdom from the EU meant, that the EU legal principle of freedom of establishment no longer applies to companies founded under English law, such as for example Air Berlin PLC. Therefore, the company will no longer be recognized as a foreign company in the form of an English public limited company due to it continued administrative seat in Germany but must be reclassified as a German civil law company (“BGB-Gesellschaft”).

The Deutsche Börse subsidiary Clearstream Banking AG is registered as a shareholder of Air Berlin PLC and holds these shares for investors who have acquired entitlements to Air Berlin PLC shares. In the opinion of the insolvency administrator, Clearstream Banking is now a personally liable partner of this company. Accordingly, Air Berlin informed in an ad hoc release that the insolvency administrator will file an initial lawsuit against Clearstream Banking AG at the Frankfurt am Main regional court for the payment of approx. 0.5 bn EUR. Also, the court is supposed to determine that Clearstream has more extensive liability.

Clearstream didn´t seem impressed with the news. However, the news has brought new potential to the Air Berlin shares, and that is always good news for a stock exchange.


K+S AG: The Time has come to optimize the Balance Sheet

In the past two years, investors in K+S went through a rollercoaster of emotions. High liabilities weighed on the balance sheet, which at the same time offered some potential for value adjustments. The relief was great when the sale of the Americas salt business consolidated in the Operating Unit Americas to Stone Canyon Industries Holdings LLC was completed in March this year.

The sale was an important milestone in the planned reduction of the debt burden, and its net proceeds of approx. 2.6bn EUR shall be entirely used for this purpose.  

Since then, it has been going fast. Immediately after the closing of the sale, K+S repaid financial liabilities of approx. 1 bn EUR and terminated the syndicated line of 350 million EUR agreed with KfW and other banks in August 2020 (which was initially granted to provide additional financial resources in the wake of the COVID pandemic).  In June, a public tender offer to buy back outstanding 2022, 2023 and 2024 bonds, which helped to reduce the financial liabilities by a further 560 million EUR.

It looks as if the conditions in Kassel became more pleasant in recent months.








Uniper SE: Fortum´s Dovecote in Düsseldorf

Once again, shareholders had to take note of changes to the management of Uniper.

On 29 March, the company announced that the Supervisory Board” had agreed with the CEO Andreas Schierenbeck and the CFO Sascha Bibert that they will leave the Board of Management of Uniper with immediate effect.

The former Chair of the Supervisory Board Klaus-Dieter Maubach is the new CEO, while the Supervisory Board member Tiina Tuomela assumed the role of the CFO. Both were initially delegated by the Supervisory Board but were supposed to take over the tasks on a permanent basis.

After all, the company has already gained extensive experience with the termination of contracts by mutual agreement. In a way, one can even speak of another copy and paste action with Uniper. It is astonishing to see that the results have not suffered under these conditions. Nevertheless, let´s keep our fingers crossed that the new members of the Board of Management will stay with us for a while.


GRENKE AG: Small Transactions can create a big Headache

This spring, GRENKE AG received far more attention than desired. Hash accusations by Fraser Perring, reluctance on the part of local investors and critical looks from BaFin resulted, among other things, in three auditing firms looking to take closer looks at the accounts and structure of the company.

Something like this always leaves some casualties, including people lost along the way. But in May, the great relief came with the unqualified audit certificate from KPMG for the 2020 annual financial statements.

Financial statements have tended to get bigger for years now, while auditor´s reports have remained rather straightforward in the past. KPMG has broken with this tradition. The report on the audit of the consolidated financial statements and of the combined management report comprises ten pages plus annex. The report was signed on 17 May. On 14 June, GRENKE announced that the Chair of the Board of Directors, Antje Leminsky, has decided for personal reasons to leave the company as of June 30, 2021, after eight years on the Board of Directors. Shareholders have more time to read the report: This year´s AGM is scheduled for July 29.


Aareal Bank AG: Just next to it is also called over

Aareal Bank´s AGM was unusually turbulent this year. In the months leading up to the meeting, the company had to deal intensively with several corporate governance issues, including the partial sale of its IT unit, a serios illness of the CEO, and demands of shareholders for extensive structural changes, including a full spin-off of the IT unit.

Shareholders´ criticism was mainly driven by Petrus Advisers, who also requested the removal of three Supervisory Board Members, and the nomination of three new members at the AGM. The request didn´t come out of the blue, since the investor has been critical of the bank`s business strategy and policies since approx. two years. Was it enough to convince the audience? Nope, approx. 69% of the share capital present at the meeting voted against this demand. Was it in vain? Nope, at least there was food for thought, and the required majority vote was not reached for the remuneration system for the Management Board, with just approx. 37% of votes casted in favor of the proposal.

Both sides had to take blows, but this is not the time to rest. Four weeks after the AGM, the bank was able to report the solution to its most pressing problem. Subject to the approval by the ECB, Jochen Klösges will become the new Chairman of the Management Board of Aareal Bank, effective 15 September 2021.

As is well known, new brooms sweep well.





Capital News


TUI AG: Taking a Diet Hanover

The COVID pandemic has unexpected consequences. For example, TUI´s shareholders learned that in May this year the company has reached an agreement to dispose of its 49% holding in the RIU Hotels S.A. joint venture to the partner Saranja S.L., which is a company owned by the RIU Group. RIU Hotels S.A. owns a real estate portfolio of 21 properties. Its enterprise value is approx. 1.5 bn EUR, and TUI´s minority stake is valued at 670 million EUR, including an earn-out-element. Therefore, the expected net cash consideration (pre earn-out) amounts to 540 million EUR at the closing of the transaction. The additional earn-out-component is payable based on RIU Hotels S.A. delivering the budgeted operating results for FY 2022 and 2023. 

Per 30 September 2020 RIU Hotels S.A. generated a total revenue of 226 million EUR, and underlying EBIT of 28 million EUR, an EAT of 10 million EUR and the EAT of TUI´s 49% stake amounted to 5 million EUR, while the book value totaled 433 million EUR. The sale, which is expected to be completed later this year, is subject to financing agreements and the usual regulatory approvals. It does not impact the 50:50 joint venture between RIU and TUI regarding the management and distribution of all RIU hotels and resorts worldwide.


OSRAM Licht AG: The last one please turns off the Light!

A delisting is always a logical step on the way to complete a takeover of a company. The whole thing is based on a simple thought. Since the dominant majority shareholder is now taking responsibility for the financing, the free shareholders are no longer needed and are at best tolerated. Still, even if you did expect this to happen, the announcement always triggers a short pause.

In March, OSRAM filed an application for the revocation of admission of the OSRAM shares to the listing sub-segment of the regulated market with additional obligations arising from the admission (Prime Standard). The intention is clear. By changing the listing sub-segment, post-listing obligations of the company such as certain reporting and publication requirements will fall away. By doing so, OSRAM intends to avoid additional efforts from the listing and achieve cost-saving and streamlining effects. The unfortunate side-effect is that the shares will be listed on the regulated market (General Standard) only, effective three months after the publication of the withdrawal decision by the Frankfurt Stock Exchange.

This sounds like a plan, doesn´t it? But the Bavarian coziness is not the style of ams AG, who informed the Managing Board of OSRAM at the beginning of May about an even better idea. ams decided to cause OSRAM to implement a delisting and to issue a delisting tender offer to the OSRAM shareholders. This is good news for shareholders looking for cash. Following the approval by BaFin, ams announced its delisting offer for the outstanding approx. 28% shares in OSRAM Licht on 21 May 2021. During the offer period, which ended on 18 June 201, shareholders could sell shares at 52.30 EUR per share. At the end of the acceptance period, 6,935,319 OSRAM shares had been tendered, corresponding to approx. 7.2% of the total capital.


CANCOM SE: Brexit gives People new Ideas

Standstill is certainly not the quality that comes to mind when you think of CANCOM. This assessment also applies to an ad hoc release published in May. The company informed that its Executive Board is reviewing strategic options regarding the business activities in the United Kingdom and Ireland. The review also includes the possibility of selling all company shares in CANCOM Ltd. This entity is the intermediate holding in which all CANCOM SE´s shareholdings based in the United Kingdom and Ireland are bundled. In the event of a sale, CANCOM will thus no longer have any business activities in these markets. In this context, CANCOM is also currently conducting a structured bidding process to determine investor interest in a takeover and an achievable purchase price.

The main bases for the review are an assessment of the risk-reward profile of the business activities in these markets, investor interest and the prospect of a high accounting profit, as well as strategic considerations about the future geographic core markets of the CANCOM Group. In FY 2020, CANCOM Ltd. and its affiliated companies in the United Kingdom and Ireland generated revenues of approx. 138 million EUR and an EBITDA of 19.7 million EUR.


HELLA GmbH & Co. KGaA: Who wants to put the company in the Shopping Basket?

The half-hearted IPO with KGaA shares indicates that HELLA did not really feel comfortable on the stock exchange. It is therefore no surprise that the search for a longer-term solution began soon afterwards. In April this year, the time had come. The Manager-Magazin reported, that the families that control the share capital of HELLA are considering selling their 60% stake in the equity of the auto parts maker. According to the report, the family has asked investment bank Rothschild to approach potential buyers.

The report did not provide the contact details of the banker in charge of this business. That wasn´t necessary either, because in any case the message sounded like a wake-up call. And in fact, several interested parties have apparently come together to consider this opportunity, including Knorr Bremse AG. The company confirmed its general interest in acquiring the block of shares amounting to 60% of the shares in HELLA GmbH & Co. KGaA held by the founding family some weeks later.  The family members must have been delighted. But just a few days later the bad news followed. The Executive Board of Knorr-Bremse did not see enough potential from the transfer of key-technologies and products to justify a transaction.

Let´s hope that there are other interested parties left in this race.