Our Sponsors

VIPCoFCCGBroadridgeLink Market Services GmbHAHEADhermesDP DHLK+SSAPGeorgesonSuedzuckerWacker Chemie AGThomson ReutersEQS Group



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 - 3rd Quarter 2017




Merck KGaA: Next strategic move under preparation

Following the completion of the sale of its biosimilar business to Fresenius, Merck KGaA prepares for the next strategic move. The company announced that it is looking into options for its consumer health business, including a potential full or partial sale of the business as well as strategic partnerships. The consumer health business with its portfolio of Over-the-Counter products delivered sales of €860 million in 2016.

The initiative fits into the corporate strategy. Merck undergoes a transformation process into a science and technology company limiting the amount of resources available to finance the growth of other areas. Consequently, the announcement concluded that any possible proceeds for a potential transaction would be used to deliver on the company´s overall financial targets.


Steinhoff International rejects allegations

In a press release, Steinhoff International rejected allegations of dishonesty made by the German magazine Manager Magazin and said that substantial facts and allegations in the magazine are wrong or misleading. The furniture giant also reminded investors that already on December 4th, 2015, the company confirmed that one of its German subsidiaries has been involved in an investigation regarding the adherence to certain provisions of the German GAAP. In the meantime, though, legal and external audit companies appointed by the company to investigate the matter independently came to the conclusion that no evidence exists that any of the transactions concerned can give rise to any contravention of any provision of German commercial law and topics were reflected correctly in the financial disclosures. Also, Steinhoff added to the statement dated August 24th, 2017, that the group`s relationship with a joint venture partner ended in disputes which are subject of several ongoing legal proceedings.

According to the press release, it is evident that the former joint venture partner abuses the press as part of a “process of litigation.” According to the market reaction, though, it is evident that some shareholders are concerned.


Pfeiffer Vacuum: Request for an extraordinary shareholders meeting received

Following two unsolicited takeover bids earlier this year and a turbulent AGM in May, Pfeiffer Vacuum informed about a request to convene an extraordinary shareholders´ meeting by Pangea GmbH, which is an investment vehicle of the Busch-group. According to the company, the agenda of the meeting is supposed to include the recall of two members of the supervisory board, including the chairman of the supervisory board, and the election of two new members. In addition, the meeting shall decide on the appointment of a special auditor to examine the conduct of the management board and the supervisory board in connection with the takeover bids, as well as the takeover of Nor-Cal Products, Inc., by Pfeiffer Vacuum.

While the message concludes with the information, that the company will consider the proposal and convene a meeting if the statutory requirements are met, a second release states on the same day that the chairman of the supervisory board Dr. Michael Oltmanns will resign form this position, effective October 25, 2017.


Südzucker: Set to be released into the wild….

A major discussion topic at this year´s Südzucker AGM has been the end of the European sugar quota and beet price regulations, effective September 30, 2017. At this point in time, it is still unclear what is going to happen when the markets are liberalized and subject to (relatively) free competition. However, what became very apparent at the meeting is that Südzucker is well aligned to benefit from the new environment. Effectively, more than 40 percent of Group turnover have been subject to this regulation so far, restraining the company, but also the competition.

The company cautioned the expectations of the audience with reference to the expected future sugar price volatility. But it should be noted as well that as a consequence of the European regulation Südzucker controls substantial underutilized capacities it can set into full production without having to make substantial investments. The result is likely to be additional sugar going into exports, potentially up to a 20 percent or more production increase, which could generate an additional earnings impact.





Buhlmann's Corner


One share – one vote

That was a popular saying many years ago when I was young, which indeed may be why it has been universally forgotten. The number of shareholder votes cast in France increases in accordance with investments, but also because there is an underlying trend for people to no-trade and leave the shares untouched. In China a giant IP ended up in the portfolio of institutional investors in a dearth of transparency not at all what is to be expected of a selling company of that stature.

Are there any pennies dropping here? Standard and Poors closed its S&P500 indicator listings with non-voted stock and snapchat as the last item. Their royal majesties, sovereigns of the gulf of # wanted to make the running for everyone but were instead brought to a halt. Their intention was to use ARAMCO to shift 1/20 into the pension fund which in turn would be managed according to the rules governing fiduciaries, a move that would have rendered null all voting rights even under the legal systems of such countries as Germany, the Bahamas or even Finland. There, the majority shareholder may do as he pleases.

And that is just what he did, firstly slashing the taxes to almost half which almost doubled the price of oil. If, instead, the king so desires the power (and worth) of ARAMCO will continue to be at the royal beck and call. Taxation now here, now there, oil cartel prices now up now down. Presently the effect will make itself felt in the pension of the retired Californian school teacher. I wonder if she knows – I wonder if she minds.

Insofar as experience is a learning curve, Deutsche Börse is feeding us a diet rich in experience, but what’s the endgame?

Some get the shares, some get the debts is the name of the game with insider knowledge an optional extra. It‘s pointless talking to the top management at DeutscheBörse AG. If they knew, they are just barefaced bad, plain and simple. If instead they didn’t know, they were unfit to be the bourse’s doormen.

See appear the long arm of the law striking a deal worth 10.5 million Euros so that Carsten Kengeter chairman of the board of management may be allowed to keep the shares that Paul Achleitner & Co managed to get to him. And so the question is if Kengeter gets to keep the shares, who gets to foot the bill?

What are we dealing with here? The fiduciary managed share capital of a company or a mountain of Monopoly money to play with?

Is the majority shareholder thought to be just naïf because he can get away with anything?

Are we witnessing trust being ousted by betrayal? And what happens if the 4 million suddenly become 10? Would that be Kengeter’s problem too?

.when the shareholder pays up (10 Mio), he is entitled to a part of the increased amount. Perhaps we should retain the services of Moelis & Co. (American investment boutique) to help Deutsche Börse put its accounts in order.

And last but not least, the deal struck between Deutsche Börse and the German government states “no malfeasance has come to light” and for that to stick “someone – parties unknown – will pay 10.5 million Euros”.

One wonders if at that point, S&P will remove Deutsche Börse from its indicator listing.

Indeed: One share – all pay








Fresenius: Focus on external growth

Just a few weeks after the extraordinary meeting of shareholders of Akorn, Inc. approved the merger agreement with Fresenius Kabi, the group announced the next acquisition initiative. Fresenius Medical Care plans to acquire all outstanding shares of NxStage for USD 30.00 per common share, valuing the company at approximately USD 2.0 billion. NxStage has approximately 3,400 employees and develops, produces and markets medical devices for use in home dialysis and care setting. The acquisition is expected to support Fresenius` strategic initiative of vertical integration and care coordination as well as the home dialysis business. The transaction is expected to close in 2018.

With the acquisitions of Quironsalud, Akorn, Merck KGaA´s biosimilar business and now NxStage, Fresenius shows a strong bias towards external growth.


United Internet: Acquisition of 1&1 Telecommunications by Drillisch completed

United Internet announced that Drillisch AG acquired the outstanding 92.25% of the outstanding equity of 1&1 Telecommunication, which is now a fully owned subsidiary. As a consideration, United Internet received new Drillisch shares. The issue of these shares to United Internet had been approved at the extraordinary general meeting of Drillisch earlier this year. This step completes the overall transaction, making United Internet the dominant shareholder in Drillisch with a 73 % holding in the company.


Thyssenkrupp: Sale of Brazilian steel mill eases financial pressure

Following the disposal of its processing plant in the US in 2014, Thyssenkrupp completed the withdrawal from the loss making American activities with the sale of its CSA Siderúrgica do Atlântico (CSA) steel mill in Brazil to Ternium. With the closing of this transaction, the company received the consideration of €1.5 billion. The transaction reduces the Group´s net financial debt significantly, thus creating a better position in future talks with its banks.


Deutsche Börse: Insider allegations reach new level

Deutsche Börse announced that it received a notification of hearing from the public Prosecutor`s office in Frankfurt, notifying the company that it intends to formally involve the company in the ongoing investigation proceedings against its CEO Carsten Kengeter. The allegations relate to an alleged violation of the insider trading prohibition in December 2015 and an alleged omission to make an ad hoc notification in January 2016.

The public prosecutors holds out the prospect to fully terminate proceedings against Mr. Kengeter by mutual agreement, but at the same time it would impose two fines of EUR 5.5M and EUR 5M on the company. Deutsche Börse said it continues to believe that the allegations made are unfounded in all respects.


Drillisch: Takeover of 1&1 Telecommunication paves the way for the formation of a new player in the German telecommunications market

On July 25th, 2017, the extraordinary general meeting of Drillisch approved capital increase from EUR 70.2M to EUR 188.9M. In return for the issuance of the new shares to United Internet, Drillisch will receive the 92.25 percent of the outstanding shares of 1%1 Telecommunication and thereafter will own 100 percent of this company.

The move paves the way for the formation of a new player in the German telecommunications market, combining the mobile and fixed-network business of United Internet with Drillisch´s mobile business. Drillisch said at the AGM that via the combination it can make a better use of the German network capacity of Telefonica. In total, Drillisch expects synergy effects of EUR 150M and more, beginning with the year 2020, while the one off expenses of the deal shall be approximately EUR 50M.

Following the capital increase, United Internet will own 73.1 percent of the share capital of Drillisch.


DIC Asset: Increasing relevance of asset management and a successful refinancing indicate a healthy earnings performance

At this year´s AGM, DIC Asset had to present a net loss for the business year 2016 to its shareholders. However, last year´s results have been impacted by one off effects of EUR 56M related to a refinancing of most of the financial debt of the group. Accordingly, the net loss for 2016 amounted to EUR 29M. However, looking forward, the refinancing of nearly one billion Euro with a new duration of seven years basically cut the interest expenses by half to approximately EUR 20M p.a. and reduced annuities, thus lowering future expenses and liquidity needs.

At the same time, the company reported progress regarding the buildup of the real estate asset management business, which increased from EUR 3.2M in the prior year to EUR 3.5M in 2016 and is expected to advance further in the current business year. In addition, the company might realize some benefits from its holding of 25.05 percent in WCM Beteiligungs- und Grundbesitz AG, which is subject to a takeover bid. The board of DIC indicated a positive view on the takeover bid for WCM.







airberlin: EU commission approves KfW credit of € 150 million

Investors, who did not buy the Air Berlin story with its unusual corporate governance structure made the better choice. In August, the company announced its filing for insolvency proceedings with the headline: “airberlin files for insolvency | German Government offers support”.

As it turned out, the government support did not mean the filing, but rather a transitional credit of € 150 million to be granted by KfW, which was approved by the EU Commission in September.

The credit shall facility the search for investors, who are invited to make an offer for the company or parts thereof until September 15th, 2017. Lufthansa looks perfectly positioned in this process.


Audi, BMW, Mercedes, Porsche, VW: How to destroy confidence

Recent weeks saw a constant flow of bad news for the German car manufacturers. Manipulation software, environmental problems, diesel bans in major cities, declining sales of diesel cars, recalls, and even criminal allegations created a climate of uncertainty with customers and shareholders. It looks like every solution found for one particular issue in this painful process was followed by several new bad news. The most recent severe topic are cartel allegations. According to newspaper articles, several car makers are believed to have disclosed on a voluntarily basis details of cartel activities to the relevant authorities.

At this point in time there has been no clear statement by any of the car makers confirming these reports, though. Nonetheless, investors are concerned as is clearly indicated by share prices. Hence, as a car manufacturer it is important these days that one can rely on strong and understanding friends. Following the announcement of VW´s recent quarterly results, Goldman Sachs left the preference shares on its “Conviction Buy List”. This decision is a clear statement. But it is also consequent, since preference shares carry only marginal governance rights. So one might argue it simply doesn`t matter, does it?







STADA Arzneimittel AG: Resignation of members of the Supervisory Board

Bad Vilbel, August 2017 STADA disclosed that Carl Fredinand Oetker (Chairman of the supervisory board)), Rolf Hoffmann, Dr. Birgit Kudlek, Tina Müller and Dr. Gunnar Riemann have resigned from their positions on the supervisory board with effect from the end of September 25th, 2017. Dr. Eric Cornut will continue his position as a member of the Supervisory Board. The release did not specify if the employee representatives on the supervisory board will step down as well.

According to Ferdinand Oetker, with the announcement of the beginning of negotiations for a domination and profit and loss transfer agreement, “we view our task in the context of the ownership changes to be complete. We have therefore decided to step down from our posts”.

The “we” seems not to include the supervisory board member Dr. Eric Cornut. Also, the step may be a bit premature, given that the beginning of negotiations does not necessarily guarantee a successful conclusion by September 25th, 2017.





Capital News


Commerzbank: Ceberus acquires substantial shareholding

On July 26th, Cerberus announced a shareholding of 5.01 percent in Commerzbank AG, thus confirming prior market speculations. The news reflects regained institutional interest in the bank. Following the acquisition of Dresdner Bank, Commerzbank had to deal with a severe crisis, requiring massive capital injections by shareholders and the German government to keep the bank afloat.

The investment by Cerberus can be interpreted as a signal for a new confidence in the company, but the intentions of the new investors need to be seen. Apart from the 5 percent holding by Cerberus, the German government still owns 15 percent, while Blackrock and Capital Group are other important shareholders in the bank.