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Corporate Governance – portrayed in the individual cultural and legal framework, from the standpoint of equity capital.

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VIPsight International

Article Index

VIPsight - February 2012



Douglas to go private?

The Douglas retail group (Douglas perfumeries, Thalia bookstores, Christ jewellers and Hussel sweetshops) is according to the will of the founding family Kreke to be rebuilt and streamlined. The Krekes, who hold about 12.62 percent of the shares in the trade group, have announced that together with the allied Oetker family (25.81 percent of the Douglas shares), they wish to raise their stake in the company. There have already been talks with several financial investors - according to Financial Times Deutschland with Apax, BC Partners and Permira - about the possible acquisition of a substantial interest by investors, possibly in the form of a public takeover offer, Douglas let it be known in mid January. There were so far no binding offers, however, nor is the structure or financing of any acquisition clarified. The deal is still in the concept phase, signalled CEO and founder’s son Henning Kreke. If it were possible, however, to buy Douglas completely through a financial investor, the company, undervalued in Kreke’s eyes, could sooner or later be taken off the market and then filleted. Kreke already has a potential adversary here: drugstore entrepreneur Erwin Müller, who holds 10.05 per cent of the Douglas shares, is likely not to like the push by the Krekes and Oetker, since he already announced some time ago he wanted to build up shares.

Sky alienates investors

The drama about incorrect subscriber numbers and alienated investors at Sky has entered a new chapter. Shortly after Christmas, under the cloak of lowered public attention, the German pay-TV channel Sky confirmed, piquantly on its Facebook page and not via ad-hoc reporting, that the U.S. film studio Paramount had terminated its contract with Sky. The deleted Paramount films would be offset by other Hollywood and smaller studios, assured film programme director Marcus Ammon. However, the attractiveness of the Sky offer could suffer, which could have a negative effect on numbers of subscribers and make the focus on the sports field advance, say observers. Investors were outraged by the Group’s information policy. Some threatened a complaint to the Federal Financial Supervisory Authority (BaFin).

Deutsche bank wants to hive off asset management

In late November 2011 Germany’s largest private bank, the Deutsche Bank, indicated it wanted to restructure its in-house asset management. Financial Times Deutschland, referring to financial sources, now sees the second round of the process ushered in: interested parties are now looking at the books. It states there are prior non-binding offers from a dozen companies for the divisions, which manage total assets worth 360 billion euros. In addition to asset management, the business with large institutional clients and the mutual-fund subsidiary in the United States are also up for grabs. By the end of February binding offers should be submitted. In addition to U.S. fund companies such as Pimco, financial investors are regarded as potential buyers. The target is revenue of two to three billion euros.

ThyssenKrupp’s heavy ballast

Even if ThyssenKrupp shareholders were able to take home a dividend again in September last fiscal year, a loss of €1.8 billion does not argue a successful business strategy. In 2010/11 the German steel giant had to write off 2.1 billion euros on its activities in America. Delays, mishaps and mismanagement had driven the cost of two new ten-billion-euro plants in Brazil and the U.S. to ever new heights.  Rumors therefore came that ThyssenKrupp might hive off its Brazilian subsidiary.  Financial Times Deutschland called the Brazilian Vale group a possible buyer. Insiders see this option at present rather in the stage of simulation games. Even given that the Brazil problem is not yet solved, and ThyssenKrupp wants to give no earnings forecasts for the current year for either the Steel Americas division or the overall group, the announced restructuring of the Group is still slow. Thus in late January it became known that the Essen firm wants to hive off its stainless-steel subsidiary Inoxum. In Finnish competitor Outokumpu it has already found a prospective purchaser. Although the workers’ representatives now fear massive job cuts, selling is the most likely scenario for the subsidiary among the IPO and spin-off options.

Postbank to transfer profits

Deutsche Postbank and Deutsche Bank on 10 January began negotiations on a control and profit-transfer agreement. Postbank will in future transfer profits to a subsidiary of the Frankfurt bank, DB Finanz-Holding GmbH. Currently, the Deutsche Bank has slightly more than half of the voting rights, and therefore not enough to prevail with the control agreement at the Postbank AGM on 5 June. As of February, Germany’s leading bank will receive a stake of about another 40 per cent in the Bonn-based Postbank from Deutsche Post. After the Postbank share recently rose to its highest level since September 2010, small shareholders are now hoping that they will be presented with an attractive settlement offer.

Börse getting nowhere

The Deutsche Börse management has offered to the Works Council to hold talks on a job-security agreement for the Hessian offices in Frankfurt and Eschborn, under the mediation of the State Chancellery in Wiesbaden. The exchange operator wants to make no compulsory redundancies for the 1,600 employees for two years, and at the same time undertake to invest a volume of at least 300 million euros over a period of three years. The council has rejected this offer, however, and currently sees no need for action. It wants first to wait and see whether the merger of the two exchanges will ever happen. The EU Competition Commission says it wants to decide on the merger project on 1 February, with 25 of the 27 commissioners here standing behind Joaquín Almunia, who assessed the proposed merger as well as the Hessian Securities and Exchange Commission critically.

Billions rain on Telekom

Deutsche Telekom got the three billion dollar compensation for the failure of the sale of T-Mobile USA remitted from AT&T at the end of 2011. In addition, the DAX group is to receive as further compensation access to the network of the U.S. telephone company in regions where T-Mobile had not been present, thus saving substantial investments. Just before Christmas, the takeover of the U.S. wireless business by AT&T for $39 billion finally failed at the resistance of American regulatory authorities. On the balance-sheet the positive special effect is countered by restructuring costs and write-downs on the U.S. mobile subsidiary, which had been postponed by the merger agreement in March last year.

KfW’s entry to EADS drags on

The German federal government’s planned entry into the European Aeronautic Defence and Space Company (EADS) through the KfW banking group will take longer than expected. Daimler is still wrestling with the State bank over details of the sale of its stake in the European aerospace group, which should have been completed before the new year. The Stuttgart carmaker actually wanted to have a Memorandum of Understanding signed by the development bank by the end of 2011, but KfW would not bow to pressure and is first checking tax and accounting aspects. The entry of a new anchor shareholder could under current law trigger a takeover offer for the shares of the other owners, which the Frankfurters want to avoid. Additionally, in the Netherlands, where EADS has its corporate headquarters, takeover law would still have to be adapted this year, as the entry of KfW would mean an amendment to the EADS shareholder pact. If the deal with Daimler falls through the bank wants to buy other investors’ shares. In addition to the 7.5 per cent from the car company the Reconstruction Loan Corporation (KfW) may want another 7.5 percent, which are held by banks and Länder. The State influence would thus increase, whereas the management of EADS really wanted to open up the company to private investors.

Siemens cancels Osram IPO for the moment

The parent company in Munich no longer expects its lighting subsidiary Osram to make it to the stock market in the first half of 2012, the news agency dpa reported, citing company circles. Actually, the world’s second-largest lamp company was supposed to go on the trading floor in autumn already. But when stock prices were in decline, CFO Joe Kaeser had to admit in November he had missed the right timing for an IPO. Although officially the preparations for an IPO continue, some analysts now see a spin-off, with Osram hived off and a distribution of shares to Siemens shareholders, as a more realistic option. Siemens originally wanted to collect up to three billion euros from the IPO of the subsidiary.

Kaufhof negotiations surprisingly broken off

Metro has cancelled the sale negotiations for the Kaufhof department stores until further notice. The difficult situation on the financial markets does not offer suitable conditions for a transaction, said Metro CEO Olaf Koch on 17 January. Three investors had indeed submitted bids for the department-store chain, but fears that financing could end up causing problems for one of the potential buyers were decisive for the decision. Finally, the trade group had negotiated with Rene Benko and Nicolas Berggruen. The bid by the Austrian Benko through the real-estate holding company Signa is supposed to have ultimately amounted to over two billion euros. Berggruen according to the Börsenzeitung offered less than two billion euros. Hiving off Kaufhof has for many years been seen as a desire of the Düsseldorf company, but had in the meantime been repeatedly rejected.