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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,
  • financed by its initiator VIP and other sponsors with a background of “Equity and Advisory” interests.

VIPsight International


Save the Date - 29 January 2019

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VIPsight - 3rd Quarter 2018 <click here>


VIPsight - News


18 October 2018

RWE AG: Too much energy in the wood

The Higher Administrative Court Münster abolished the immediate enforcement of the forest clearance as permitted by the main operation plan 2018 – 2020 for the lignite opencast mine in Hambach. As a consequence, RWE has to await the final decision on the further forest clearance, which will be issued later in the main proceedings. Depending on the outcome, RWE may be allowed to resume the forest clearance thereafter.

As a result of the court decision, as of 2019 the EBITDA of the segment Lignite & Nuclear will be negatively affected in the range of a low three digit million Euro amount per year.


AUDI AG: Fall cleaning I

On October 2nd, 2018, the supervisory boards of Volkswagen AG and AUDI AG finally consented to the conclusion of an agreement with Rupert Stadler on the termination of his offices as a member of the managing board of Volkswagen AG and chairman of the managing board of AUDI AG, as well as his service agreements. According to the press release, Mr. Stadler is leaving the companies with immediate effect and will no loner work for the Volkswagen Group. He is supposedly doing so because, due to his ongoing pretrial detention, he is unable to fulfil his duties as a member of the managing board and wishes to concentrate on his defence. The contractual execution depends on the course and outcome of the criminal proceedings.


AUDI AG: Fall cleaning II

The Munich II public prosecutor issued an administrative order against AUDI AG in its capacity as affected party (Betroffene) pursuant to sections 30 para. 1, 130 para. 1 of the German Act on Regulatory Offences (Ordnungswidrigkeitengesetz - OWiG) in the context of deviations from regulatory requirements in certain V6 and V8 diesel aggregates and diesel vehicles manufactured or distributed by AUDI AG. The administrative order provides for a fine of EUR 800 million in total, consisting of the maximum penalty as legally provided for of EUR 5 million for negligent regulatory offences and the disgorgement of economic benefits (Abschöpfung wirtschaftlicher Vorteile) in the amount of EUR 795 million. As a result of the administrative order imposing the fine, the active regulatory offence proceedings conducted by the Munich II public prosecutor against AUDI AG will be finally terminated.

AUDI AG accepted the fine and it will not lodge an appeal against it. By doing so, Audi AG admits its responsibility for the deviations from regulatory requirements.


Thyssenkrupp AG: Split into two companies planned

The supervisory board of thyssenkrupp AG unanimously agreed to the managing director´s plan to divide the group into two separate companies via a spin-off.

According to the plan, the industrial goods (“thyssenkrupp Industrials”) and the materials (“thyssenkrupp Materials”) businesses shall be managed as independent, listed companies with direct access to the capital markets each. thyssenkrupp Industrials operates as a pure capital goods business and will consist of three units (elevator business, automotive supplier business and core plant construction). The remaining activities of the group will be concentrated at thyssenkrupp Materials, comprising the steel and stainless steel production including the 50 percent holding in the future steel joint venture, materials trading and steel-related processing.

The two new entities will be of comparable size. Based on pro forma data for fiscal 2016/17, thyssenkrupp Industrials would generate sales of around 16 bn Euro, while thyssenkrupp Materials would have sales of approximately 18 bn Euro.

The split has to be decided at an AGM, which could take place approximately 12 – 18 months from now.


17 October 2018

Linde AG: Getting closer to the final spurt

Linde AG confirmed that Praxair and Linde aligned on October 1st, 2018 with the staff of the U.S. Federal Trade Commission (FTC) regarding the required sales of business activities in the United States and related commitments and that such remedy package has been submitted to the FTC Commissioners for their decision.

The company added that a successful completion of the business combination is, in addition, subject to the timely receipt of the required buyer approval by the European Commission. According to a prior announcement, the outstanding regulatory approvals need to be granted prior to October 24th, 2018.


Fresenius SE & Co. KGaA: Court backs Fresenius´ exit from merger agreement with Akorn 

In the lawsuit by Akorn Inc. against Fresenius for the consummation of the April 2017 merger agreement the Court of Chancery in the U.S. state of Delaware ruled in favor of Fresenius. However, the judgement is not yet final.

Fresenius terminated the merger agreement due to Akorn´s failure to fulfill several closing conditions. An independent investigation initiated by Fresenius had revealed, among other things, material breaches of FDA data integrity requirements relating to Akorn´s operations. Akorn responded by suing in the court of Chancery in Delaware for the consummation of the agreement.

The news came as a blow to Akorn shareholders. In an initial market reaction, Akorn shares dropped by more than half despite the announcement of the intention to appeal the court decision.


BMW AG: Substantial investments planned in China

BMW announced the intention to raise its holding in the joint venture with its Chinese partner Brilliance China Automotive Holdings, BMW Brilliance Automotive from 50 percent to 75 percent. Both partners signed a corresponding agreement, which still is subject to the approval of the relevant authorities and the consent of Brilliance China Automotive Holdings.

At the same time, the joint venture announced an investment of more than three billion Euro in new and existing plant structures over the coming years, thus increasing the production capacity to 650.000 units from the early 2020s.

The importance of China is indicated by sales of around 560.000 BMW-cars in 2017. Two thirds of all BMW vehicles sold in China last year were produced at the joint venture.

In light of the American-Chinese trade war, it is interesting to note that this is the first ever such move by a global car maker as China begins to relax ownership rules for its market. The relevance of this step for the shareholders of Brilliance China Automotive Holdings was underpinned by an approximately 30 percent share price decline following the announcement of the initiative.


STADA Arzneimittel AG: Time to say goodbye

Nidda Healthcare, a company controlled by Bain Capital and Cinven Partners, published an offer document for the public delisting tender offer for all shares of STADA Arzneimittel AG. The four-week acceptance period will end on November 8th, 2018.

Nidda Healthcare offers a cash consideration of 81.73 Euro per STADA share. This price equals the weighted average domestic stock exchange price of STADA shares during the last six months prior to the announcement of the decision to make a public delisting tender offer. The cash consideration represents a premium of approximately 23.5 percent on the offer price of 66.25 Euro per STADA share during the takeover offer in 2017, and a premium of 10 percent on the cash compensation of 74.40 Euro offered to minority shareholders in the context of the domination and profit and loss transfer agreement.


Aurubis AG: European Commission expressed concerns regarding the approval of a sale of the segment Flat Rolled Products

In the course of merger control proceedings regarding the sale of the segment Flat Rolled Products of Aurubis to Wieland Werke AG, the European Commission informed Aurubis and Wieland that clearance of the transaction can probably not be achieved with the proposed remedies. The critical hurdle may be overcome with further remedies. However, Wieland is not obliged to offer these under the terms of the Sale and Purchase Agreement. Hence, Aurubis expects that the execution of the transaction is not any longer more likely than not.

Aurubis made clear that it does not share the Commission´s current assessment and that the parties agreed to continue the merger control proceedings in order to still achieve clearance of the transaction. Nonetheless, the managing board of Aurubis has identified strategic alternatives to the transaction as part of a contingency planning.


Leifheit AG: Supervisory board recalls CEO Thomas Radtke with immediate effect

The homepage still displays a prominent feature of the former CEO, stating “There is still plenty of potential in the Leifheit and Soehnle brands. We want to exploit this potential.” Not with him anymore, though. On October 15th, 2018, the company issued a profit-warning and informed that the supervisory board recalled the former CEO Thomas Radtke as member of the board, releasing him from his duties with immediate effect. The original appointment of Mr. Radtke ran until the end of 2019.

According to the release, the term of Mr. Radtke is linked to the strategy “Leifheit 2020”. Despite a successful start in the initial phase of the implementation, more recently the success “failed to appear”. Hence, the supervisory board had “to accept loss of confidence of investors and business partners.”

Apart from the announcement of changes on the management board, the release also contains a detailed explanation of the amendments to the strategy and the consequences of the measures taken, including a profit-warning, which in part is due to expenses incurred in the context of the recall of Mr. Radtke.

An unfortunate development, but a fair and detailed information of shareholders.


CECONOMY AG: Profit warning alarms shareholders

In a capital market news release dated October 8th, 2018 CECONOMY warned that based on preliminary figures the 2017/18 EBITDA is expected in the region of 630m Euro, well below last years´ 714m Euro (before special items), while the EBIT would amount to approximately 400m Euro (prior year: 494m Euro before special items). These numbers are well below the data published just three weeks earlier in another prior profit warning published on September 18th, 2018.

CECONOMY did not provide concrete background information about the reasons for the substantial deviation from the first profit warning except for a hint that it is attributable to MediaMarktSaturn Retail Group. But this does not explain why such an amount could evaporate from the earnings expectations within such a short period of time. The lack of appropriate information resulted in speculations that the company may have miscalculated rebates it expected from suppliers, resulting in a sharp decline of the share price.

In an extraordinary meeting held on October 13th, 2018, the supervisory board and the CEP Peter Haas decided to part ways “by mutual consent” with immediate effect. Based on an understanding with the supervisory board, the CFO Mark Freese shall remain in office until the appointment of his successor and an “amicable revocation” of his employment contract has been found. The chairman of the supervisory board, Jürgen Fitschen, added in a statement, that “we are firmly convinced that this is the only way for CECONOMY to restore the trust that has been lost on the capital market.”

Unfortunately, even with the third statement in a row CECONOMY missed the chance to inform shareholders about what really happened and why the CEO left the company with immediate effect, although no replacement seems to be in sight. Full financial disclosure for the past fiscal year 2017/18 shall be published on December 19th, 2018.


9 October 2018

Deutsche Bank AG: BaFin appoints special representative

In order to prevent money laundering and terrorist financing, BaFin ordered Deutsche Bank AG to take appropriate internal safeguards and comply with general due diligence obligations, based on section 51 (2) sentence 1 of the German Money Laundering Act (Geldwäschegesetz).

BaFin also appointed a special representative in accordance with section 45c (1) in conjunction with section 45c (2) no. 6 of the German Banking Act (Kreditwesengesetz) in order to monitor the implementation of the ordered measures. The notice became final on September 21st, 2018.

Furthermore, the management board of Deutsche Bank appointed Stephan Wilken as head of Anti-Financial-Crime and Group Anti-Money Laundering Officer, effective October 1st, 2018. Wilkens replaces an executive who is leaving for Danske Bank to become chief compliance officer and join the board of that bank. Wilken´s appointment is still subject to regulatory approval.


Grammer AG: Ningbo Jifeng lost Grammer´s board members

Following the successful acquisition of an 84-percent stake by its Chinese majority shareholder Ningbo Jifeng, the members of the executive board of Grammer AG announced that they plan to utilize their contractual change-of-control rights and resign as members of the board. As an explanation for this move, the announcement stated that the unexpectedly high acceptance rate of the takeover offer of Ningbo Jifeng resulted in a more clearly than expected shift in the shareholder structure of Grammer AG. 

In particular the CEO Hartmut Müller has been central in the managements strategy to implement the group´s growth strategy, including the establishment of the strategic partnership with Ningbo Jifeng at a time when the company was the target of an unwelcome approach by another strategic shareholder. The change-of-control-clause exercised now by the members of the executive board was introduced in this phase.

The news release clarified that the terms of the business combination agreement with Ningbo Jifeng are still in force. The agreement contains extensive commitments for the preservation of the Group´s national and international sites. In addition, the news release stated that the majority shareholder supports the continuation of the company´s growth and innovation strategy as well as its financing and dividend policies. Furthermore, it indicated that the supervisory board expects to fill the board positions swiftly. 


27 April 2018

Deutsche Bank AG: Strategic adjustments in its corporate & investment bank (CIB)

After several years of standstill, Deutsche Bank decided to shift more decisively towards more stable revenue sources and to strengthen those core business lines which are most important for its European and multi-national clients. The bank will focus its corporate finance business on industries and segments which either align with its core European client base or link to financing and underwriting products in which it enjoys a leadership position, scale back activities in US rates sales and trading, and undertake a review of its global equities business with the expectation of reducing its platform.

Part of the initiatives are a significant reduction in workforce (in particular as a consequence of the right-sizing of the corporate & investment bank), delayering of management structures across the organization, a rationalization of external spend and real estate footprint worldwide, and increasing efficiency of control systems.

As regards the investment banking, the new CEO Christian Sewing stated in this context: “We are on a good track both in the DWS asset management business and in our private & commercial bank, although we need to substantially improve profitability in both. Our corporate & investment bank is also doing well in some areas and held or gained market share in certain areas. However, we are not strong enough in other areas of this business. Therefore we have to act decisively and to adjust our strategy. There is not time to lose as the current returns for our shareholders are not acceptable.”

Deutsche Bank´s AGM will be held on May 24th, 2018.


26 April 2018

Linde AG: Squeeze out planned

In order to facilitate the planned business combination, Linde AG and Praxair, Inc. agreed to implement a merger of Linde AG into Linde Intermediate Holding AG as the surviving entity in the event of a successful completion of the business combination. This move would help to simplify the group structure. Its implementation includes a squeeze out of the remaining minority shareholders of Linde AG against cash compensation and would only become effective in the event of a successful completion of the business combination.

Linde Intermediate Holding AG is a wholly-owned indirect subsidiary of Linde plc. In the event of a successful completion of the business combination, Linde Intermediate Holding AG is expected to hold approximately 92% of the shares in Linde AG. To that end, Linde intermediate Holding AG will enter into negotiations with Linde AG regarding a merger agreement. An extraordinary shareholders´ meeting which would resolve the transfer of the shares of the remaining shareholders of Linde AG to Linde Intermediate Holding AG against adequate cash compensation would take place following the completion of the business combination.


Porsche Automobil Holding SE: Won´t get far this way….

In January Porsche moaned about a decision of the Regional Court of Stuttgart. The press release complained that the court deemed the executive board and supervisory board of Porsche to not have sufficiently fulfilled its obligations under Sec. 91 (2) AktG to set up a functioning monitoring system in fiscal 2015 “after the so called diesel issue came to light on 18 September 2015.” And of course the company added that it considers this allegation to be without merit.

In April the prosecutors searched offices of Porsche. The investigation targeted current and former managers over the diesel emission scandal, including suspicions of fraud and misleading advertising. According to the press, the investigation concerns a Porsche board member, another member of the upper management and a third person.

By the way, this time the company did not bother to make a press release, not to mention an ad hoc news…..


Steinhoff International Holdings NV: Sale of Holding in Poco is on the way

According to an article in the German newspaper Handelsblatt, Steinhoff and the owner of the XXL Lutz furniture chain, Andreas Seifert, found a solution for the quarrel over the furniture retailer Poco at a meeting at the Regional Court of Dortmund. The settlement includes a sale of the shares in Poco previously held by Steinhoff to Seifert. In return for the 50% holding, Steinhoff will receive EUR 266.25 million. The transaction is still pending, subject to approval by the family trust of the founder of Poco, Peter Pohlmann.

According to the article, Steinhoff previously valued 100% of Poco at EUR 650 million, i.e. 50% equals EUR 325 million. The article does not say, however, whether this amount would be the book value of the Poco shares sold.


25 April 2018

Fresenius SE & Co. KGaA: Merger agreement with Akorn terminated

On April 22nd Fresenius announced that it has decided to terminate the company´s merger decision with Akorn due to Akorn´s failure to fulfill several closing conditions. The announcement mentioned material breaches of FDA data integrity requirements relating to Akorn´s operations found during Fresenius´ independent investigation. According to the release, Fresenius offered to delay its decision in order to allow Akorn additional opportunity to complete its own investigation and present any information it wished Fresenius to consider, but Akorn has declined that offer. 

Akorn reacted with a lawsuit against Fresenius at the Court of Chancery in Delaware, for the consummation of the merger agreement. Here, it argues that Fresenius was obliged to close the transaction because all closing conditions of the merger agreement, except for the FTC clearance, were met. However, Fresenius confirmed that it believes that Akorn failed to fulfill several conditions, and that it will take all necessary and appropriate measures to vigorously contest the claims.

Following a first indication of problems with the planned USd 4.3 bn transaction in February this year, investors had become increasingly concerned. Akorn´s shares droppd by more than 35 percent on the announcement.


Innogy SE: Due diligence regarding certain business activities granted

Just a few weeks after it E.ON Verwaltungs SE announced its intention to make an offer for the shares of Innogy in mid-March, the company received a request by an interested acquirer to grant a due diligence regarding its business activities in the Czech Republic and to provide selected information on the respective business activities. Also, the company received expressions of interest for certain business activities in the divisions Renewables, Retail and Grid& Infrastructure.

E.On plans to offer a cash consideration of EUR 36.76 per Innogy share via a voluntary public takeover offer. In addition shareholders would receive dividends paid for the financial years 2017 and 2018, which are estimated to amount to EUR 3.24 per share.

At this stage, it is still open whether and on what terms offers for individual business activities will be submitted and if they could have an impact on the voluntary offer by E.ON.


GEA Group AG: CFO takes early retirement

GEA Group announced that its supervisory board and the CFO Dr. Helmut Schmale have mutually agreed that Dr. Schmale will step down from the executive board prior to the termination of his appointment, which is due to expire by the end of March 2021. Pending a decision on his succession, Dr. Schmale will continue to perform his present tasks and responsibilities.

A few weeks earlier, the company already announced that the CEO Jürg Oleas does not intend to extend the term of his office beyond December 31st, 2019, and suggested to leave the executive board at the AGM in April 2019 in order to allow for a swift change in leadership.

Recent earnings announcements and the share price movement since the beginning of this year did not meet investor´s expectations. The upcoming changes on the executive board level may pave the way for a more positive trend.


DWS Group GmbH & Co. KGaA: Stabilization efforts reduce net IPO proceeds for Deutsche Bank

According to the homepage of DWS, the shareholding of Deutsche Bank AG amounts to 77.75%. This information is based on the information contained in a voting rights notification published at the time of the IPO.

Already four weeks later this information is no longer current. During this period, Credit Suisse acquired shares via stabilization measures, thus ending up with approximately 3.5 million shares, which are supposed to return to Deutsche Bank, raising its holding in DWS to approximately 79.5 percent, and reducing the already disappointing net proceeds from the IPO from 1.4 bn to EUR 1.33 bn. Still, the share price remained well below the issue price.


METRO AG: Transfer of Real-business in new entity planned

As a consequence of unsuccessful collective bargaining negotiations with the trade union Verdi about a collective bargaining solution, METRO decided to prepare alternative collective bargaining solutions.

Following two years of negotiations with Verdi without any result, METRO created the framework conditions for a new approach to collective agreements, according to the CEO Olaf Koch. The company has therefore started to prepare the prerequisites for a collective agreement outside of the current HDE structure (Association of German Retailers) and intends to utilize its membership in the employers association AHD for that purpose.

Basically, this means a realignment within the METRO Group, including the transfer of the operating business of Real (retail sales) into the Metro Services GmbH. Verdi criticized the move since the remuneration of employees is supposed to be lower in the new entity, and the move would make the business look more attractive in case of a sale at the expense of employees.


thyssenkrupp AG: Status of the negotiations with Tata

In September 2017 thyssenkrupp informed about the plan to form a joint venture of its European steel activities with Tata Steel Europe. At the time, the partners expected to finalize the negotiations regarding the details of the transaction and the due diligence at the beginning of 2018, when a signing was supposed to complete this process.

In the meantime, the reality of complicated business transactions took its toll. In April, the company made an announcement regarding the progress achieved so far. According to the release, the due diligence of both businesses is almost complete and viable solutions for key issues have been reached. However, Tata Steel is still working to finalize certain arrangements, which is why thysssenkrupp expects that the boards can decide on the joint venture within the first half of the year, rather than at the beginning.