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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,
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VIPsight International

Article Index



Capital News


Bayer AG: When the Rooster crows on the Manure too early

What a success. After a long period of bad news flow, Bayer was finally able to present a result that was expected to end the long and expensive disputes related to Glyphosate. Bayer inherited this can of worms with the acquisition of Monsanto. At the time, many investors thought that Bayer had a good understanding of the legal and social problems associated with Monsanto. Given the price paid, the expectation was not completely unfounded. But perhaps wrong, as later developments show.

On June 24th, 2020, Bayer announced a series of agreements that should resolve major outstanding Monsanto litigation, including U.S. Roundup ™ product liability litigation. In particular, the Roundup ™ resolution was supposed to bring closure to approximately 75% of the respective litigation, involving approximately 125,000 filed and unfiled claims overall. Bayer intended to make a total payment of 10.1 bn USD to 10.9 bn USD to resolve current and address potential future Roundup ™ litigation. The resolution also provided for a mechanism to resolve potential future claims. The total payment can be broken down in 8.8 bn USD – 9.6 bn USD to resolve the current litigation, and 1.25 bn USD to support a separate class agreement to address potential future litigation.

This was good news for the bond market. For example, we could read on GlobalCapital:   “Bayer investors shrug off major settlement with 17.5 bn EUR of demand for new bonds. Bayer, the German life sciences company, enjoyed blow-out demand for its 6 bn EUR multi-tranche bond issue on Wednesday, days after agreeing to pay up to 10.9 bn USD to settle a lawsuit over claims its weedkiller, Roundup, causes cancer.”

Just a week later reality kicked in. The class agreement is subject to approval by Judge Vince Chhabria of the U.S. District Court for the Northern District of California, and the judge might have some concerns. On July 8th Bayer announced that “it is in agreement with counsel representing the proposed Roundup settlement class on their decision to withdraw the pending motion for preliminary approval of the parties´ issue class agreement. The withdrawal will enable the parties to more comprehensively address the questions recently raised by Federal District Court Judge Vince Chhabria of the Northern District of California, who presides over the federal Roundup litigation.”


Deutsche Lufthansa AG: Determined Shareholder worries Politicians

These were exciting days for Lufthansa´s shareholders. The group was no exception in its industry. Official requirements, airport closings, and a serious drop in demand amidst the COVID pandemic led to an existential crisis. As part of the measures to deal with the financial impact, the company and the German government had agreed on a financial rescue package. And as it happens occasionally when you are in a particular hurry to get things done, the shareholders did not receive enough attention.

Well, at least one shareholder made clear that he did not like this ignorance towards him. Heinz Hermann Thiele, who at the time owned 15% of Lufthansa, demanded a second look at the planned measures. Apart from excited public reactions of uninformed politicians, this led to hectic communication, at the end of which the parties were ultimately able to communicate. After all, this is a kind of result, although one may doubt that the investor acted solely on the entertainment value.

On June 25th, the mood had already calmed down and the EGM approved the capital measures proposed by the Boards. The package provides for stabilization measures and loans of up to 9 bn EUR. The Economic Stabilisation Fund of the Federal Republic of Germany will make convertible silent capital contributions of up to 5.7 bn EUR. It will also establish a 20% stake in the share capital of Deutsche Lufthansa AG by way of a capital increase.  The conversion rights of the silent capital can be exercised in case of a takeover bid for Lufthansa and to secure the interest payments on the silent capital contributions, resulting in a further five percent capital increase. The package is supplemented by a loan of up to 3 bn EUR by a group of banks, including KfW.

By the way, a few days ago Lufthansa informed about a reduction of Mr. Thiele´s position in Lufthansa´s equity from 15.52% to 12.42%. But this is just a relative effect, due to the issue of new shares to the Stabilisation Fund.


K+S AG: Adjustment of the Dividend Proposal to maintain the Eligibility for KfW Support

The handling of the effects of the COVID pandemics also places new demands on CFOs and shareholders. A good example is K+S AG, which had to adjust the dividend proposal for 2019 to the legal minimum dividend of 0.04 EUR per share. The previous dividend proposal was 0.15 EUR per share. The decision to adjust the proposal was made to maintain eligibility for a KfW state-secured loan.

At first glance, this is a good and convincing argument. The effects of the COVID pandemic are obvious, and a cautious approach is appropriate. This applies all the more when looking at the balance sheet ratios. And the continuing uncertainty on the capital and financial markets about the economic consequences of the crisis is probably not helpful for the planned sale of the American salt business either. But there is light to see at the end of the tunnel. At the AGM, the CFO confirmed that the sales process is going well so far and the company still is expecting to sign a contract in 2020, while the closing will take more time. Shareholders still have to hold their breath for a while.


Aareal Bank AG: Approaching a Separation from its IT-Subsidiary

Amidst strong shareholder pressure, the Management Board of Aarela Bank decided to enter into discussions with financial investors on the sale of a significant minority stake in its subsidiary Aareon AG. Aareon is a leading consultancy and IT systems house for the European property industry. The goal of the structured sale process is to join forces with a partner in to strengthen growth prospects and to further expedite its growth program. Aareal Bank intends to remain Aareon´s majority shareholder.

According to the bank, the process should be carried out quickly and without prejudice to the outcome. Besides the commercial aspects of a potential transaction, key criteria will include support for Aareon´s growth strategy, particularly in terms of stepping up M&A activities, and the potential partner´s specific transaction and sector expertise. According to press reports, Aareon should be valued around 0.5 bn EUR. In 2019, Aareon contributed to 37 million EUR to the group result.

At first glance this sounds like a logical step in the right strategic direction to strengthen the long-term perspective for the business. But not every shareholder appreciated this initiative. According to Reuters, the activist hedge fund Teleios Capital called for a dual-track process for both a majority and a minority sale of the software business. Teleios holds a 6.5% stake in the bank. This pressure might prove helpful to speed up the sale process. But will it be enough to encourage the management to expand the target group for the sale?


QUIAGEN N.V.: Good News can be bad News

This is good news for shareholders: On July 13th QUIAGEN announced earnings above prior expectations and improved growth and earnings prospects amidst the growing demand for its products and services due to the COVID pandemic. But perhaps not everybody was happy to learn how strong the business developed in recent months.

Following several months of back-and-forth over a potential acquisition of QUIAGEN, Thermo Fisher finally launched its proposal to acquire QUIAGEN at 39 EUR per share on May 18th, 2020. This proposal valued QUIAGEN at approximately 11.5 bn USD (including the assumption of approximately 1.4 bn USD of net debt). The Managing Board and the Supervisory Board of QUIAGEN unanimously recommended accepting the offer. Interested shareholders could do so until July 17th, 2020, while the additional offer period shall start on July 31st and will end on August 13th. The offer was subject to a minimum acceptance threshold of at least 75% of QUIAGEN´s issued and outstanding ordinary share capital as of the end of the acceptance period.

Sounds good, but not yet good enough. The strong performance and improved outlook of QUIAGEN in recent months encouraged several shareholders to request a higher offer price. And this time Thermo Fisher acted swiftly. On July 16th, the offer price was increased to 43 Euro per share, while the minimum acceptance threshold was lowered from 75% to 66,67%. This sounds better, although it comes with a catch: If the minimum acceptance threshold is not met, Thermo Fisher shall receive a 95 million USD expense reimbursement payment.


ams AG: Succesful Closing of the OSRAM Licht AG Acquisition

It was not only the COVID pandemic that temporarily raised doubts about the success of the ams takeover bid for OSRAM LICHT. It is therefore all the more pleasing to see a positive message in these rather demanding times. And this is such a message: ams announced on July 9th the successful closing of the OSRAM LICHT AG acquisition. The takeover offer has been fully settled today and the offer price paid to the holders of the tendered shares.

Following the closing, ams holds 69% of all shares in OSRAM LICHT (excluding treasury shares) based on the result of the takeover offer and additional purchases equivalent to a transaction value of approximately 2.7 bn EUR. It goes without saying that ams expressed its understanding that it expects to gain representation on the Supervisory Board of ORAM LICHT based on its shareholding and plans to announce further steps towards the integration of the two companies in due course.

But the story is not yet off the table. Only a few days later, ams informed about the issue of 200 million EUR senior notes and an additional 50 million USD senior notes “in connection with the OSRAM LICHT AG” in the second half of July. We better expect further news from this transaction.