ACTIONS CORNER
COMMERZBANK AG: Why opt for an easy Solution if complicated is a valid Option?
A key element of the banks Strategic Program COMMERZBANK 5.0 is an increased focus on the expansion of its mobile banking capabilities, including a possible merger of comdirect bank AG into Commerzbank. Amid this background, it´s fully-owned subsidiary Commerzbank Inlandsbanken Holding GmbH released an acquisition offer on October 30th, offering 11.44 EUR per outstanding comdirect share. The acquisition offer was subject to the condition of a minimum acceptance threshold of 90% of the share capital (including 82.31% of comdirect shares already held by the bidder).
As required by Section 27 of the German Securities Acquisition and Takeover Act (WpÜG), the Management Board and the Supervisory Board of comdirect published a Joint Statement on the public takeover offer. In this statement, the Boards conclude that the amount of the offer price is appropriate, and therefore recommend short-term oriented shareholders to accept the offer. However, concerning shareholders with an interest in long-term development of comdirect, the boards decided that they cannot assess the strategic orientation comdirect will receive together with the bidder and COMMERZBANK and therefore refrained from giving a recommendation.
By the end of the offer period on December 6th, 2019, the number of shares tendered amounted to 457,343. Including shares already held, the shareholding of the bidder amounted to 82.63% of all shares outstanding. Consequently, the acceptance threshold of 90% has not been reached and the offer was not executed. However, COMMERZBANK already announced that it plans to integrate comdirect through a direct merger into Commerzbank. The indicated acquisition of additional shares from Petrus Advisers Ltd. might help to lift the COMMERZBANK`s holding above the 90% threshold and facilitate a later merger.
DELIVERY HERO SE: Expansion in Korea
Delivery Hero signed agreements with shareholders, including senior management, of Woowa Brothers Corp. Woowa operates the largest online food delivery service in South Korea, Baedal Minjok, which generated approximately 100m orders in Q3 2019. In the financial year ending December 2018, Woowa grew revenues by 96% year-on-year to 242m EUR, with GMV reaching 4.0bn EUR and an EBITDA of 46m EUR. Apart from its Korean operations, Woowa also operates a successful business in Vietnam.
The transaction is valued at an enterprise value of USD 4.0bn on a cash and debt-free basis (before adjustments). Delivery Hero is expected to achieve a 100% ownership in Woowa for a consideration of approximately 1.7bn EUR in cash plus 1.9bn EUR in shares. At closing, Delivery Hero will acquire up to 88% of the share capital of Woowa from institutional investors, while the remaining 12% currently held by Woowa board members shall be exchanged in Delivery Hero shares over four years. The new shares issued by Delivery Hero from the existing authorized capital will be equivalent to 17.5% of Delivery Hero´s share capital post-transaction.
The closing of the transaction is subject to certain conditions including financing and regulatory approvals and is expected to occur in the second half of 2020. In this regard, it should be noted that according to the Korea Times Delivery Hero is already running Yogiya and Baedaltong food delivery services in Korea, making it the dominant player in the country´s food delivery market. Nielsen Korea expected that Yogiyo´s market share reached 33.5 percent last year, while Baeldaltong controlled 10.8 percent. Woowa would add its Baedal Minjok´s food delivery service, i.e. the outstanding 55.7 percent market share. Hence, the fate of the transaction will most likely be decided by the Fair Trade Commission.
ADO Properties S.A.: Consolidation Train under full Steam
ADO Properties decided to make a voluntary public offer to the shareholders of ADLER real estate AG in the form of an exchange offer for the ordinary shares in ADLER. The plan is to offer 0.4164 new shares in ADO as consideration in exchange for each tendered share of ADLER.
In connection with the offer, ADO and ADLER entered into a business combination agreement, covering the strategic objectives of ADO and ADLER concerning portfolio diversification, the intended future governance structure for the combined group´s business and the integration process, the timeline and the conditions of the offer. The combined company shall be named ADLER Real Estate Group. Also, ADO entered into irrevocable undertakings with major shareholders of ADLER – including inter alia the Co-CEO of ADLER, Thomas de Vargas Machuca – representing 52.21% of the shares and voting rights in ADLER, whereby such shareholders committed themselves vis-á-vis ADO, subject to certain conditions, to submit their share within the acceptance period of the offer.
Based on current figures, the business combination of ADO´s Berlin-based portfolio and ADLER´s Germany-wide portfolio will create an 8.6bn EUR residential portfolio. As of the time of publication, the planned transaction offered ADLER shareholders a 17.33% premium to ADLER´s closing share price before the announcement. The combined company with an estimated free float capitalization of approximately 1.8bn EUR is considered to be a likely MDAX-candidate.
Concurrently with the conclusion of a strategic cooperation agreement, ADO will acquire a 22.18% stake in the German residential developer CONSUS for a cash consideration of 294m EUR. Including shares already owned, ADO´s will control approximately 25% of CONSUS. As part of the agreement, the two companies will work closely together on residential development projects. Furthermore, a call option has been agreed with Aggregate Holding SA, CONSUS` 51% shareholder. The option can be exercised within the coming 18 months with the consideration being paid in new ADO shares, at an exchange ratio of 0.239 ADO shares for each CONSUS share. In case of a change of control at ADO, Aggregate also has a put option to sell its 51% stake in CONSUS to ADO.
First Sensor AG: Another one bites the Dust
In July 2019, First Sensor received a voluntary public takeover offer from TE Connectivity. By the end of the acceptance period on September 2nd, First Sensor Shareholders hat tendered a total of 7,376,321 shares in return for a consideration of 28.25 EUR per share. This outcome was no surprise given that at the time of the offer the bidder had already concluded irrevocable agreements with various anchor shareholders of First Sensor who held approximately 67% of the total outstanding shares between them. These shareholders undertook to accept the takeover offer for all shares in their position.
The offer did not establish a minimum threshold level. Therefore, at the expiry of the initial acceptance period, all non-regulatory offer conditions had been fulfilled. Nonetheless, shareholders who did not accept the offer within the initial acceptance period could do so during the additional acceptance period which ran until September 19th, 2019. By the end of this additional period, the total number of shares tendered increased to 7,380,905 shares, which corresponds to 71.87% of the total share capital and voting rights of First Sensor.
On December 10th, 2019, TE Connectivity approached First Sensor to discuss its intention to establish a domination and profit and loss transfer agreement pursuant to Section 291 ff AktG.
The Executive Board of First Sensor has decided to enter into discussions on the conclusion of a domination and profit and loss transfer agreement. However, these discussions are subject to the completion of the public takeover offer of TE Connectivity, which still is subject to the conditions of the foreign investment clearances in the United States of America and in the Federal Republic of Germany. In a prior publication, First Sensor expected the acquisition to be completed by mid-2020 at the latest. Shareholders of First Sensor may have to put Berlin on this year´s Summer vacation agenda…
Aroundtown SA / TLG IMMOBILIEN AG: Consolidation Wave at full Swing with Real Estate Companies
In September 2019, when TLG bought a 9.99% holding in Aroundtown, the company announced its intention to commence discussions concerning a potential merger. These discussions resulted in a business combination agreement with Aroundtown SA on November 19th, 2019, followed by a voluntary public exchange offer to all TLG shareholders by Aroundtown on December 18th, 2018.
With this offer, Aroundtown offers 3.6 Aroundtown shares for each TLG share. The exchange ratio was derived from TLG´s and Aroundtown´s EPRA NAV per share, in each case as of June 30, 2019. Based on the XETRA closing prices (Frankfurt Stock Exchange) for the shares of both companies as of November 18, 2019, the implied price per TLG share amounts to 27.66 EUR, representing a premium of 3.2% to TLG´s last closing price. The largest TLG shareholder, Ouram Holding S.á.r.l., has already entered into an agreement with Aroundtown to tender, under specific conditions, approximately 28% of TLG shares into the exchange offer. The offer will expire on January 21st, 2020.
The Management Board and the Supervisory Board of TLG support the exchange offer amidst expected efficiency improvements and cost reductions of the joint operations and the management of the combined property portfolio. The business combination is expected to create a leading pan-European platform for commercial real estate assets with a portfolio size of more than 25bn EUR. According to TLG´s management, the synergy potential could lead to an improvement in the pre-tax operating profit of between 110m EUR and 139m EUR per year within five years.
So far this sounds like a typical merger transaction, but there is an interesting additional element involved. The business combination agreement stipulates certain governance rights for TLG which reflect the principle of joint leadership in the controlling company of the combined group. In particular, Aroundtown shall introduce a new management body consisting of five members, of which TLG may nominate the CFO, if Aroundtown holds more than 50% of all TLG shares. Aroundtown will nominate the CEO. In case Aroundtown holds at least 66% of TLG’s shares, TLG may nominate one of the remaining three members. One of the TLG-nominated members shall be Co-CEO. If Aroundtown exceeds the 50% threshold, its board of directors shall comprise up to 8 members, including Aroundtown’s current three executive members and three or four independent members within the meaning of Luxembourg listing rules. If Aroundtown holds 40% or more of TLG’s shares, the chairman of the board shall be nominated by TLG and have a casting vote in case of a tie. Upon receipt of the requisite merger clearance, TLG may, in addition, nominate two out of four members in a newly formed integration committee at the level of Aroundtown, the primary objective of which is the discussion of the necessary steps to integrate both businesses. Further, TLG may nominate an additional member to Aroundtown’s advisory board.