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VIPsight

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


Article Index

VIPsight - 4th Quarter 2020

 

COMPANIES

 

thyssenkrupp AG: Waiting for strategic Progress

There are companies whose financials make you wonder what made the COCID pandemic worse about it. thyssenkrupp is an example of this. So as not to be misunderstood, the pandemic had an impact on the fiscal year 2019/20. But was it really necessary to highlight this factor in the heading for the related press release, when the main problems of this group are structural and the pandemic only acted as a fire accelerator? The answer seems to be yes, throwing another question mark about the preciously already dubious outlook for the group.

As expected, the balance sheet could be significantly strengthened by the proceeds from the elevator sale. But only part of the fire can be extinguished with this liquidity. What it did is buying time for the necessary steps to reestablish the remaining activities as leading players in their markets. The CEO statement, therefore, is not a truism, but a bitter necessity put in nice words: “Our strengthened balance sheet gives us the opportunity to systematically implement further necessary steps in our plan for the future of thyssenkrupp. We´re not yet where we need to be and will therefore keep on working persistently.”

The pandemic effects can be quantified. Initially, the group planned to reduce the workforce by 6,000 over three years. The pandemic added additional 7,400 jobs. One has to admit that there is always room to argue about whether the original plan was too conservative and COVID presented a proper scapegoat to raise the numbers. Probably there are already heated discussions with union representatives about this. But these are useless arguments. With these accounts, thyssenkrupp made clear that the struggle is about survival and not cosmetics. And the main culprit is still the same, the Steel Europe division, which contributed an adjusted EBIT loss of 946m EUR. What is more, the forecast indicates a loss in the low three-digit million EUR range.

But at least the report kept some hole alive with the confirmation, that thyssenkrupp is exploring various competing options for the steel business. This is in line with press speculations about talks with Liberty Steel, Tata Group, and SSAB. A fundamental decision on the steel business is expected to be made in spring 2021. 

 

Delivery Hero SE: Korean Authorities prescribe a Diet

It seems the days of the great dreams of borderless international expansion are over in Berlin.

In December 2019, Delivery Hero announced the purchase of shares in, and the establishment of a joint venture with the management of Woowa, the operator of Korea´s largest food delivery platform. At the time the closing of the transaction was expected to occur in the second half of 2020, subject to certain conditions such as financing of the cash consideration and regulatory approvals, including merger control clearance by the Korean Fair Trade Commission.

Although the valuation looked high in the pre-COVID-environment, investors appreciated this news since the transaction would have granted Delivery Hero the dominant position in this important market. This is one of the reasons why the following fundraising activities of the company went smoothly. However, there was a long noticeably silence on the regulatory front until it banged on November 13th, when the company confirmed receipt of the examiner´s report in which the case team of the Korea Fair Trade Commission recommended that the Commission require the divestment of Delivery Hero´s fully-owned subsidiary Delivery Hero Korea LLC. As a condition to the antitrust approval for the previously announced joint venture with Woowa Brothers Corp. And investors learned from the announcement that it is even worth because there is no certainty whether the Commission will follow the suggestions of the examiner´s report to ask for the divestment or request other remedies from Delivery Hero in its final approval of the joint venture (assuming, it will be approved). 

But wasn´t the strong market position to be achieved through the combination of the activities of Woowa and Delivery Hero the justification for the transaction and the high valuation? In any case, it looks like the time has come for the board of Delivery Hero to get on the plane to Seoul and refresh their knowledge of Korea.