Capital News
Daimler AG: Cleaning the Diesel is not an easy Task
In September 2019 Daimler AG informed about a fine in the amount of 870m EUR related to its diesel cheating scandal. This settlement concluded the public prosecutor´s administrative offense proceeding against Daimler AG.
Despite the fine, Daimler continued to deny any wrongdoing. Nonetheless, the Diesel scandal continues to burden the company. In January, the Financial Times reported that more than 200 institutional investors are seeking 900m EUR in damages from Daimler, alleging that the Mercedes-Benz owner failed to disclose the use of diesel emissions cheat devices. The underlying claim is that shares once worth more than 90 EUR a share fell to approximately 60 EUR in 2018 after regulators accused the carmaker of installing illegal software in its vehicles. Hence, the company is accused of violating its obligations under capital market law by not mentioning the existence of the devices in its financial reports or in ad hoc announcements. In contrast to previous connotations by Daimler, German officials said that 700,000 Daimler cars in Europe had been fitted with systems designed to defeat pollution tests.
Quiagen NV: Shareholders did not receive a Christmas Present
This biotech company looked ripe for a takeover. Hence, it did not come as a surprise when QUIAGEN N.V. announced in November 2019 the start of a review of potential strategic alternatives after having received several conditional, non-binding indications of interest for the acquisition of all issued and outstanding shares of the company. At the same time, Quiagen announced that the Supervisory Board and the Management Board started discussions with interested parties in this process. The aim of the discussions was to explore potential strategic alternatives that could provide greater value creation opportunities than stand-alone growth prospects. According to market rumors, Thermo Fisher Scientific, Inc. was one of the parties interested.
This was great news for the share price. While the stock just saw a record low around 22 EUR in October, the quotation jumped to over 38 EUR within a few days following the news release. But on December 24th, reality struck with the publication of the company´s decision to terminate the discussions. This came as a reminder to shareholders of the company´s less-than-optimal recent business performance, resulting in a sharp decline in the share price.
Villeroy & Boch AG: Unrest in the China Business, or perhaps in Luxembourg?
The Management Board of Villeroy & Boch AG decided to revise the company´s forecast for 2019. While the revised expectation is a decline to between 825m EUR and 850m EUR for the consolidated revenue, while the forecast for the EBIT has been reduced to between 48m EUR and 52m EUR. In a press release, the company explained the need to revise the prior expectation in light of an unsatisfactory revenue development in the first half of 2019. At the same time, the release advised that preliminary agreements regarding the sale of a former plant property in Luxembourg have been concluded and that the Management Board expects the transaction, which was supposed to be completed in 2019, to generate a “high eight-figure non-recurring income”.
This was reason enough for shareholders to expect a positive signal towards the end of 2019. Instead, the company announced on December 30th the resignation of the chairman of the Supervisory Board with effect from December 31st, 2019, and on the following day the resignation of the Chairperson of the Audit Committee, effective February 29th, 2020. Shareholders are assured that the vacancies will be filled shortly. But are the revised earnings guidance still valid, and what happened in Luxembourg?
Scout24 AG: Convincing Advice from Elliott
In May 2019, a voluntary public takeover bid by funds advised by Hellman & Friedman LLC and affiliates of The Blackstone Group LP for Scout24 AG failed to reach the acceptance threshold. Hence, the company had to take a fresh look at its strategy and came up with a new strategic roadmap to enhance long-term value creation for its shareholders, which included a strengthening of the two core business verticals ImmobilienScout24 and AutoScout24, which became the probably most short-lived long-term strategic roadmap in 2019.
About a week after the publication of its strategic long-term roadmap, the company received an interesting message from Elliott Advisors, which at the time advised funds that collectively held an interest representing more than 7% of the share capital of Scout24 AG. According to the letter, which still can be downloaded from www.scoutingforvalue.com, Elliott believed at the time that there are concrete and prudent steps that the management of the company should be taking that could drive the share price to more than 65 EUR per share, including a comprehensive strategic review focused on achieving a full separation of the AutoScout24 business, and a more ambitious share buyback program. The advice was supplemented by the statement that “Elliott looks forward to continuing to engage with the Boards of Scout 24 to help deliver this outcome.”
In December 2019 Scout24 announced the sale of AutoScout24 and another entity to Hellman & Friedman. The consideration (before potential adjustments) of 2.892bn EUR exceeded the market expectations and shareholders are now looking forward to the next step, i.e. the “more ambitious” buyback program.
TUI AG: Updated Dividend Policy
TUI AG informed about an update to its dividend policy. The company´s Supervisory Board approved an update prepared by the Executive Board to the capital allocation framework, which included the Group´s future dividend policy. The new policy shall apply for the first time for the financial year 2020 (ending on September 30th, 2020), i.e. for dividend payments from 2021 onwards. In this respect, TUI intends to pay a core dividend payout of 30 – 40% of the group´s “underlying EAT”, with the minimum payout defined as 0.35 EUR per share.
The company expects the new dividend policy to result in lower payouts, but pointed out that the dividend floor of 0.35 EUR per share guarantees shareholders a minimum payout irrespective of the market environment of the tourism industry and subsequent impacts on the “underlying EAT”.
At the same time, TUI defined the Group´s financial priorities as follows:
- Organic growth
- Payout of a core dividend
- Accretive mergers & acquisitions and portfolio optimization
- Excess cash to be returned to shareholders.
At the same time, a solid balance sheet shall be maintained and the gross leverage ration should be kept within the range of 3.0x – 2.25x.
While many German companies still underestimate the relevance of a transparent dividend policy for shareholders, TUI opted for an ad hoc release. Thank you!
Delticom AG: Finally financed
Delticom´s shareholders must be very patient people. The company has a business model, the shares are listed, and it had ambitious plans. But corporate governance is not a particular strength with this leading European online retailer for tires and car accessories, specialist in e-food, etc. In this respect, 2019 highlighted once more that the combination of a business model and some business activities by itself is not yet enough to create a solid corporate entity.
2019 started with a strange news flow. In March 2019, Delticom realized that there were delays in the preparation and audit of the financial statements 2018 and that it became apparent that Delticom and the auditor, KPMG, were too optimistic with regard to the time required for the auditing process. But it took until March 19th for Delticom to note that the 2018 annual report could not be published as planned on March 21st, 2019. Also, the AGM had to be postponed for this reason. Four weeks later, it became apparent that the company used the time to acquire advice on how to structure the further process. Therefore, in an ad hoc release dated April 26th, the company explained to its shareholders: “As soon as it has been determined when the financial statements will be prepared and audited and approved by the Supervisory Board, Delticom will set and announce a date for the publication of the Annual Report and the Annual General Meeting.”
By the end of June, the uncertainty as regards the past was over, since the preparation and audit of the financial statements could be concluded by June 25th, 2019. However, the accounts underwent a few minor adjustments during this process. In particular, the EBITDA declined to 9.0m (2017: 9.3m) EUR (preliminary result 2018 as announced in March 2019: 12.0m EUR).
On November 15th, 2019 Delticom published an update on the company status, according to which a restructuring concept had been developed and the first implementation steps already been taken. More importantly, the company informed that it was negotiating with the financing banks a continuation of the existing financing. In addition, the release informed that on August 7th, 2019, Delticom concluded a standstill agreement with its financing banks, which has since been extended already several times.
Funny enough, to scare naïve shareholders seems to require an ad hoc-announcement with Delticom, while the more positive conclusion of an agreement with the financing banks on the extension of the financing until the end of 2021 was published as corporate news. Anyhow, stranger things happen from time to time, such as the statement by the member of Delticom`s Managing Board Andreas Prüfer: “Now we are in calmer waters and can concentrate consistently on our business goals.”
Ups, same thing again?
Nordex SE: Technical Takeover Offer
Nordex issued 9,698,244 new shares under exclusion of subscription rights to its anchor shareholder Acciona S.A. by way of a private placement at an issue price of 10.21 EUR per share. The capital increase amounts to 10% of the share capital before the increase. The issue price corresponds to the volume-weighted average price of the Nordex shares on the last three trading days in XETRA trading on the Frankfurt Stock Exchange before the capital increase resolution. The gross proceeds of the issue amount to 99m EUR, and the share capital of Nordex will consist of 106,680,691 bearer shares after the increase.
The information regarding the use of the proceeds sounds like somebody hit the standard textbook modular for capital increases: “The proceeds serve to strengthen the company´s capital structure….” Fine, we heard that many times already. But the release contained an interesting bit of extra information. Due to the completion of the capital increase, Acciona´s shareholding in Nordex will exceed 30% of the company´s share capital. Hence, Acciona will be obliged to announce and effect a mandatory public takeover offer to all Nordex shareholders, or it could announce and implement a preemptive voluntary takeover offer, the release clarified.
On November 18th, 2019, the voluntary public takeover offer to the shareholders of Nordex by Acciona was published. The bidder offered a cash consideration of 10.34 EUR per share of Nordex SE. This offer expired on December 18th, 2019, with an additional acceptance period pursuant to Section 16 WpÜG ending on January 6th, 2020. On January 9th, 2020, the final acceptance level was announced and it turned out that until the end of the additional acceptance period, the offer has been accepted for a total of 149,399 Nordex shares. Accordingly, including the shares already held, Acciona now controls 38,845,395 Nordex shares corresponding to 35.41% of the share capital and the voting rights.
PNE AG: Successful Offer due to Waiver of initial Threshold Requirement
PNE shareholders are used to turbulences. In particular, the corporate governance of the company gave cause for concern. But perhaps these days are over now as a consequence of the outcome of the recent public takeover offer.
On August 26th, 2019, the company confirmed market rumors concerning conversations with Morgan Stanley Infrastructure Partners on possibilities of co-operation and investments that would include a takeover offer for PNE. These negotiations resulted in the signing of an investment agreement with Photon Management GmbH, an indirect wholly-owned subsidiary of funds managed and advised by Morgan Stanley Infrastructure Inc., on October 10th, 2019.
Based on this agreement, Photon announced its intention to make a public takeover offer at a price of 4.0 EUR per PNE share in cash on October 31st, 2019. The offer price corresponds to an approximate 31% premium in relation to the unaffected share price on August 26th, 2019, and an approximate 21% premium on the volume-weighted average share price over the past three months. The initial offer provided for a minimum acceptance threshold of 50% plus one share. Also, the parties planned already to alleviate the annoying burdens of corporate governance by way of withdrawal of admission for trading of the PNE shares form the regulated market, subject to the acquisition of more than 50% of the voting rights in PNE.
Unfortunately, the acceptance of the offer fell short of expectations, not least due to shareholder criticism of the offer price. Hence, the bidder waived the minimum threshold requirement and the acceptance period was extended from November 28th, 2019, to December 12th, 2019, with an additional acceptance period according to Sec. 16 para. 2 of the German Securities Acquisition and Takeover Act ending on December 31st, 2019. Until then, the offer had been accepted for a total of 9,322,325 PNE shares, corresponding to approximately 12.17% of the share capital and voting rights of PNE AG. Together with the 20,953,096 PNE shares already directly held by the bidder on that day, the total of approximately 40% of the share capital fell far short of the original threshold of 50%.