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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.

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VIPsight International

VIPsight - 4th Quarter 2017




Volkswagen AG: No suspension of special audit

According to a Reuter´s report, Germany´s highest court has rejected a bid by Volkswagen to suspend the work of a special auditor appointed to investigate management´s actions in the “Dieselgate” scandal.  In its request Volkswagen argued that the naming of a special auditor by a court violated its fundamental rights and asked for an injunction. While the judge panel stated that the complaint “is neither a priori inadmissible nor is it obviously ungrounded, it also added that the company had not convincingly made the case for an immediate decision. As a consequence, the special audit is likely to go ahead and shed some light on certain topics related to the “Dieselgate” scandal which could help shareholders to better understand what happened and what actions should be taken. 


RWE AG: Small claim, big impact?

The Hamm Higher Regional Court decided to proceed with a Peruvian farmer´s case against RWE. At first glance this looks like a marginal issue, given the amount in question (17,000 EUR) and the early stage of the process. But the relevance of the decision might extend well beyond the issue under consideration. The farmer claims that RWE´s contributions to global warming were threatening his hometown and is asking for money to fund flood defenses he plans to install. RWE argues that under the German Civil Code a single emitter cannot be held liable for processes with a global impact such as climate change, due to the vast diverse sources and amounts of global greenhouse gas emissions from both natural and manmade nature, the climate´s complexity and its natural variability. At this point in time, this is no more than a court decision to proceed with a case. But given the reasoning for the decision, it might indicate a shift in the way German courts look at similar issues in the future.


Innogy SE: Changes to the executive board

On 13 December 2017, shareholders had to digest a profit warning by innogy. According to the news, profits for 2018 are expected below prior expectations, and even 2017 had to take a hit due to the persistently difficult market environment in the UK retail business. In light of the forecast reductions, the CEO Peter Terium stated: “We are a trailblazer of change. We do not wait to see what happens – we set trends.” A week later action followed, with the announcement of his resignation form the executive board with immediate effect. While Mr. Uwe Tigges will assume the position of CEO on a temporary basis, no decision on the succession has been taken yet. The supervisory board thanked Peter Terium for his successful work. At the same time, though, the announcement stated that the supervisory board welcomes in general the corporate and finance strategy pursued, but sees the necessity for greater emphasis on cost discipline and a more focused growth and investment strategy.


QIAGEN N.V.: Birds of a feather flock together

QIAGEN N.V. announced that it is transferring the U.S. listing of its global shares to the NYSE from the NASDAY market. The transfer is expected to become effective on or about 10 January, 2018. According to QUIAGEN, many companies, including several of its laboratory customers and pharmaceutical industry co-development partners are listed on the NYSE. The transfer is expected to provide greater visibility within the healthcare sector and expand the companies´ shareholder base. The announcement did not provide information about the role of the sponsor in this move.


Siemens: IPO of Healthcare unit planned for the first half of 2018

At the beginning of this month, Siemens announced the appointment of Jochen Schmitz as the new CFO of Siemens Healthiness, effective 1 December 2017, while the former CFO Thomas Rathmann will be leaving his position by mutual agreement.

What came along like a typical personality news later turned out to be an important milestone for the planned IPO of Siemens healthcare, which was announced on 29 November 2017. For the public listing, a new company (Siemens Healthiness AG) will be established. According to the news release, the legal prerequisites for the listing - which is planned for the first half of next year - have largely been fulfilled, and the global coordinators have been engaged.


Daimler AG – Reorganizing the dinosaurs´ administration

Daimler AG announced plans to strengthen the divisional structure in order to “better focus on changing requirements of markets and customers”. The plan is to create legally independent entities for the divisions Mercedes Benz Cars & Vans and Daimler Trucks & Buses. Hence, the holding Daimler AG would have three pillars, including the already legally independent Financial Services division.

This decision follows intense internal discussion regarding the protection of employee rights, resulting in the extension of the agreement on safeguarding employment until the end of 2029 (»Zukunftssicherung 2030«), increasing the funded status of pension obligations, and an extension of the common profit-sharing bonus of Daimler AG. The decision on the implementation of the new divisional structures still needs to be taken by the Board of Management and the Supervisory Board, while the shareholders´ approval may follow at the AGM 2019 at the earliest.

Oops, this looks like a good idea to reorganize the dinosaurs´ administration, but when do you plan to start working on the concrete challenges ahead of the company?


Südzucker: News about the European sugar market liberalization finally reached Ireland

If you ever wondered about the meaning of a claim like “we aim to provide our clients with innovative, timely and commercial ideas based on a fundamental knowledge and understanding of the companies we cover and the industries within which they operate”, a recent publication by Davy Research may provide an inside view.

Since several years, Südzucker did inform its shareholders about the implications of the sugar market liberalization. The topic has been widely discussed at the AGMs and in corporate publications. Hence, one could not really imagine that there still have been investors who were not yet aware of the facts and the related risks and chances. Wrong assumption, as it turned out, very wrong. Under the heading

Südzucker: “New playbook required as European sugar market liberalizes” an amazing story has been published recently by Davy Research. The surprising conclusion: “As such, we are entering a period of uncertainty for European sugar processors.”, and the recommendation: “We revise our sugar segment assumptions and consequently move our rating to ‘Neutral’ from ‘Outperform’”

This is a great story, but perhaps a few years too late. Or did I get something wrong here: innovative, timely, knowledge and understanding, etc.?


Bayer AG: Positive side effects of the Monsanto acquisition

With the Monsanto takeover by Bayer approaching the planned closing date, the interest begins to focus more and more on the details and side effects of the transaction. With assets to be divested in the volume of potentially more than USD 5 billion in order to win the approval of authorities for the deal, the stakes are high, and open questions need to be answered soon. Rumors are that BASF may be interested to acquire a package of seed and chemical assets from Bayer.

Following the mergers of the industry giants forming so called integrated businesses with seeds and agrochemicals under one roof, such an acquisition could be the last sustainable market entry for BASF. In all, eliminating strategic options looks like a potentially a very attractive side effect of the Monsanto acquisition for Bayer and shows the clever architecture behind this deal. Bayer also announced the sale of additional 9.4 percent of Covestro, realizing Euro 1.2 billion with this transaction. Please note that this transaction enhances Covestros´ outlook for a DAX entry, thus creating additional value for the shares remaining in Bayer´s pockets.






Buhlmann's Corner


Are we sure that there are always two sides?

Generally speaking, and as long as we stay within the bounds of how votes are cast in AGMs worldwide, there are two sides to choose from, that of ISS (International Shareholder Service) on the one hand and the proposals of GL (GlassLewis) on the other. That said, there are certain situations in which the two sides come alarmingly close.

Airbus sells ten or so aircraft and in return agrees to plough back approximately double the turnover in the client’s country. When this bizarre soupe du jour was being concocted in the perfidious kitchens of Parisian officialdom, nobody batted an eyelid. One does wonder, however what will keep the Supervisory Board on a sufficiently short leash  if not the entente of equality between the two founding countries.

The two mammoth German energy producers, E.ON and RWE, took six years to fall in line with the notorious Energiewende (energy transition requirements), devised overnight at the end of 2010. So far, nobody (nobody? really?) has come forward claiming full or partial compensation for confiscation. Legally speaking, compensation may be granted for loss of worth. In the case of RWE, the board of management disagreed on who should do what and, following the tenets of free love for all, the chair of the Supervisory Board kept the conflict under wraps.

At this juncture in the proceedings, however, the problem of  auditor impartiality, arises even for holdings of less than 77% which is when the situation deteriorated and a result of 100 Million Euros sent shockwaves through the system.

Luckily, things went better for E.ON, at least up to the point when to everyone’s surprise Uniper, E.ON’s sister company was not divested but taken from an elderly mother (E.ON)  and given to a younger one (Fortum). We are, however at a loss as to the 30% acquisitions premium and the upcoming generation who will be entrusted with the ups and downs of other peoples’ wealth..

Once upon a time Rockefeller invented petrol. Today his wealth is in good company in one of the biggest state funds that grew on oil and gas. Both invest their money but no longer in the CO2  business. They have withdrawn from positions of power and influence in the management of oil and gas and deprive these industries use of their assets.

Double moral standards and bilateral conduct, a policy emulated by our very own Grand old Deutsche Bank in its bid to have part of its asset management quoted and thence sold while still  keeping control of it.The new shareholders would have very little say and so, in order to keep the wheels turning the boss of the new and old DWS Vermögensverwaltung – Nicolas Moreau –management board member of the parent and the subsidiary company kept on a very loose leash-

Werner Brandt’s whistling can be heard approaching, a sign that he’s trying to loosen the same knots in the RWE spin off. Some say he’s doing it to get himself elected to the Supervisory Board of Siemens  which through Gerhard Cromme is basking in a financial  reappraisal.

The question remains whether, instead of only two sides, it mightn’t be a bad idea to upscale to a third way not unlike the ideas that young people propose when forms of government come up for discussion One of these third ways is called activism, and increasing numbers of activist shareholders are coming forward to fill the power vacuum. The number of their attacks in the US has risen 20% over the last five years and two new campaigns are being launched every day. Step by step the trend is making itself felt in Europe, sometimes via other regions.

The main drawback lies in their proposals and initiatives  being a lot less creative or rooted in accountability than would be desirable. They call for change at the top and strategies that produce instant results. Analysis and responsibiity, such as the universal right to vote during AGMs are a long way down the list of priorities.

The motion is approved; there are two sides to everything, just remember to keep both feet on the one side.


It always seems impossible until it’s done (Nelson Mandela)






CECONOMY: Strong year-end share price performance

With an increase by 3%, CECONOMY-shares are the top performer on the last trading day in 2017. The increase was triggered by the death of the co-founder of Media Markt, Erich Kellerhals, who died at the age of 78.

For many years the dispute between the two shareholders in Media Markt, which is majority-owned by CECONOMY, blocked the management flexibility and tied capacities. The death might pave the way for an end to a fierce battle over the control and management of Media Markt, as some investors hope that his heirs would be able to reach a solution.


Deutsche Börse AG: Programmed for trouble with BaFin?

In mid-November, the supervisory board appointed Mr. Theodor Weimer as CEO auf Deutsche Börse AG, effective 1 January 2018, for a period of three years. Mr. Weimer follows Karsten Kengeter, who resigned with effect of 31 December 2017. Unfortunately it looks like the media received word about the new appointment ahead of the rest of us, and in particular the ad hoc release in this context might have come a bit too late. Frankly speaking, one does not really understand why this information has been published in ad hoc-form, since the market expected a qualified replacement for Kengeter anyhow. So, rather than being a real legal issue, this incident looks more like a great opportunity for BaFin to share its ideas on what kind of information needs to be published ad hoc and what might go without. However, if for example the current supervisory board of Deutsche Börse where to decide to step down in light of the recent governance problems with Deutsche Börse, this could come as a surprise to the market and require communication via ad hoc-release.


Linde AG: Acceptance ratio for the voluntary public takeover offer of Linde plc to the shareholders of Linde AG reached 90% threshold

Linde AG announced that the acceptance ratio for the voluntary takeover offer in the form of an exchange offer of Linde plc to the shareholders of Linde AG in connection with the planned merger of equals with Praxair reached the 90% threshold. Accordingly, Linde plc could initiate a merger-related squeeze-out pursuant to section 63(5) of the German Transformation Act (Umwandlungsgesetz) in the event of a completion of the planned business combination.

This news followed the news that Praxair`s CFO Matthew White told investors that the plant-engineering unit, along with the U.S. medical gases division Lincare, could be divested. Mr. White is expected to become the finance chief of the combined group.


Lufthansa takes off

The recent acquisition of NIKI Luftfahrt GmbH and Luftfahrtgesellschaft Walter mbH, from Air Berlin Group, is a substantial capacity push for Lufthansa´s subsidiary Eurowings, adding 17 Bombardier Dash 8 Q400 and 33 Airbus A320 aircraft to its fleet. In the same 13 October press release Lufthansa announced that Eurowings plans to acquire additional aircrafts.

On 16 October, Lufthansa provided further clarification regarding their acquisition plans. The airline announced that it had submitted an offer letter expressing its interest in establishing a “NEWAlitalia”. The offer targets parts of the Global network traffic and European and domestic point-to-point business and is expected to further strengthen the market position of the leading airline.


Deutsche Börse AG: With a little help by my friends…

Deutsche Börse AG announced that the company will inform the public prosecutor that it would accept the fines announced in relation to accusations of an alleged violation of the prohibition against insider trading in December 2015 and of an alleged failure to publish an ad hoc announcement in January 2016. By doing so, the company agrees to pay two fines under separate proceedings pursuant to section 30 para. 4 sentence 1 of the German Regulatory offences Act (Ordnungswidrigkeitengesetz).

However, the company added that it does not share the public prosecutor´s view concerning the accusations raised. Also, the company assumes that the current investigation proceedings against the chairman of the executive board, Carsten Kengeter, will be closed subject to conditions.

As the transaction smells like a ransom payment for Mr. Kengeter, many shareholders and customers expressed a negative response. Hence, let´s press our thumbs that Mr. Kengeter and the members of the supervisory board will get an opportunity to explain what happened to shareholders at next year´s AGM.


Siltronic AG: Please delete the first sentence

It is still common practice with many German companies to allow shareholders to “adequately participate in the positive business performance”, thus putting the owners of the business on the same entitlement level as any other stakeholder. Accordingly, it is no surprise to read such a statement in an annual report.

However, Siltronic went a step beyond and announced a defined dividend policy that “aims at distributing around 40% of the consolidated earnings of the Siltronic Group according to IFRS principles, attributable to the shareholders.” This part of the message is appreciated by shareholders, thank you. But please delete the sentence in the announcement regarding the adequately participation, since it could be misinterpreted in this context.








Airbus and Bombardier counteract on anti-liberal measures of the US government

Airbus announced the acquisition of a majority stake in the C Series Aircraft Limited Partnership. This transaction combines Airbus´ infrastructure and capacities with Bombardier´s newest aircraft family in the 100-150 seat market.

The C Series Aircraft Limited Partnership headquarters and primary assembly will remain in Quebec, while a second, final assembly, line will be established in Mobile, Alabama. The transaction helps Airbus to widen its product range by adding a very attractive segment at relatively low investment costs. Meanwhile, Bombardier is expecting to neutralize the effects of punitive tariffs announced by the US government. At the same time, it could help to reduce the threat of a severe backlash for Boeing due to the introduction of the punitive US tariffs. For example, the UK government recently warned that Boeing could lose UK defense contracts as a consequence of the tariffs, which now may have become redundant.

The transaction is a clever move by Airbus and Bombardier; joining forces to optimize results in a growing and attractive market segment. But it also may have been fostered by the announcement of punitive US tariffs, thus highlighting the risks created by imprudent government actions for US companies with international activities such as Boeing.


Black and Grey: The EU Publishes Its Lists of Tax Havens

by Gibson Dunn

On Tuesday, December 5, 2017, the EU announced its long-awaited list of seventeen "non-cooperative" tax jurisdictions (the "Black List") and identified a further 47 jurisdictions with whom discussions about tax reform are ongoing (the "Grey List").  The countries identified in both lists were among a number of jurisdictions invited by the EU to engage in a dialogue on tax governance issues in early 2017.  The Black List identifies jurisdictions that failed to engage in a meaningful dialogue with the EU or to take action to address deficiencies identified in their tax practices. The Grey List identifies jurisdictions whose tax policies and practices continue to present concerns but which have committed to address issues raised by the EU.

The origins of the list date back to a European Commission Recommendation from 2012, which was followed by detailed assessment work carried out since June 2015, pursuant to a published Commission action plan.

The EU has not announced any immediate steps to be taken against the blacklisted jurisdictions and instead has deferred to EU member states to take action.

The jurisdictions on the Black List are:

American Samoa   Marshall Islands   St Lucia  
Bahrain   Mongolia   Samoa  
Barbados   Namibia   South Korea  
Grenada   Palau   Trinidad & Tobago  
Guam   Panama   Tunisia  
Macau       United Arab Emirates  

In its announcement on December 5 the EU noted that these seventeen jurisdictions had "taken no meaningful action to effectively address the deficiencies [identified by the EU in relation to their tax legislation and policies] and do not engage in a meaningful dialogue…that could lead to…commitments" to resolve issues raised. The EU confirmed that the jurisdictions will remain on the Black List until they meet certain criteria it identified in a publication of November 8, 2016 in relation to tax transparency, fair taxation, and the implementation of the OECD Base Erosion and Profit Shifting (BEPS) package.

In addition the EU published a Grey List containing a total of 47 other jurisdictions, and identified one or more specific ongoing concerns in relation to each of those jurisdictions.

The jurisdictions on the Grey List are:

Armenia   Guernsey   Niue  
Aruba   Hong Kong   Oman  
Belize   Isle of Man   Peru  
Bermuda   Jamaica   Qatar  
Bosnia and Herzegovina   Jersey   Saint Vincent and Grenadines  
Botswana   Jordan   San Marino  
Cape Verde   Liechtenstein   Serbia  
Cayman Islands   Malaysia   Seychelles  
Cook Islands   Maldives   Swaziland  
Curaçao   Mauritius   Taiwan  
Faroe Islands   Montenegro   Thailand  
Fiji   Morocco   Turkey  
FYR Macedonia   Nauru   Uruguay  
Georgia   New Caledonia   Vanuatu  
Greenland       Vietnam  

In its conclusions on the Grey List the EU described these 47 jurisdictions as presenting concerns in relation to the criteria published on November 8, 2016 referred to above, and noted that it will continue to monitor the implementation of agreed steps to address the identified deficiencies. The stated purpose of the Grey List is therefore to act as a spur to continuing reform and progress in these jurisdictions.

Having expressed its sympathy for jurisdictions hit by the severe hurricanes in the Caribbean this year, the EU has put its screening process for eight Caribbean jurisdictions on hold.  These jurisdictions are: Anguilla, Antigua and Barbuda, Bahamas, British Virgin Islands, Dominica, Saint Kitts and Nevis, the Turks and Caicos Islands, and the United States Virgin Islands. Contacts with those jurisdictions will resume by February 2018, with the screening process in relation to those jurisdictions to be completed by the end of 2018.

While there is much to debate and dispute as to the allocation of jurisdictions to these lists, it should also be noted that the EU excluded from consideration EU member states themselves. This spares from consideration Gibraltar, as it is (pending BREXIT) formally part of the EU. After BREXIT there will be no bar to the United Kingdom or Gibraltar being considered for inclusion on either list.

In the run up to the publication of the lists, there was much speculation as to the sanctions and punishments that the EU would impose on jurisdictions included in the Black List. It had been suggested the EU could impose an EU-wide withholding tax on financial transfers into such jurisdictions, as well as a transfer tax on transfers out of those jurisdictions. While such measures may be adopted if the European Commission considers blacklisted jurisdictions to be continuing to be non-cooperative, in the short term the EU has decided to leave the question of the imposition of sanctions to the individual EU member states themselves.

This decision undercuts one of the stated purposes of the Black List – namely that of replacing the existing patchwork of national measures against non-cooperative jurisdictions with a coordinated approach by the EU. Nonetheless, inclusion on the Black List signals the EU's view that a particular jurisdiction fails to comply with tax good governance standards. This carries with it a measure of reputational damage for the jurisdictions in question vis-à-vis investors.

Clients and friends operating in the United Kingdom or in Europe may well have become familiar during the course of this year with the need to conduct a "risk assessment" for the purposes of complying with the EU's Fourth Money Laundering Directive (implemented in the United Kingdom, for example, by The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017). One of the risks to be assessed as part of such work is "geographic risk", with the assessing body required to take into consideration published views of international bodies. The publication of the Black List and Grey List should now be taken into account in the conduct, or periodic review, of that risk assessment. Those conducting risk assessments may need to consider the appropriateness of enhanced due diligence for entities incorporated in, doing business in, or with links to jurisdictions included on either list.

Clients and friends operating in the United Kingdom may also have completed, or be embarking on, a similar risk assessment under the United Kingdom's Criminal Finances Act 2017 regarding the "failure to prevent the facilitation of tax evasion" offences. Our recent  client alert on these offences can be found here. Again "geographic risk" forms part of such assessments. As in the AML sphere, best practice will be to take account of the EU's Black  List and Grey List in the conduct of, or periodic review of, such a risk assessment. Operations in these jurisdictions (especially those blacklisted) or work relating to these jurisdictions may require enhanced scrutiny as part of any risk assessment, and, where necessary, possibly enhanced controls or training as part of the implementation of "reasonable prevention procedures".

When it comes time to update a company's Bribery Act risk assessment, again the impact of these lists should be considered as part of that process.

Finally, it is worth noting that these designations are relevant only with respect to the EU. In the United States, for example, no such list has been proposed to date, and the imposition of sanctions by EU member states is not expected to have any direct US legal or tax consequences for entities from the blacklisted jurisdictions.

We will continue to monitor developments and will provide an update when the EU makes its decision in 2018 on eight outstanding Caribbean jurisdictions.







Airbus SE: Top Management Succession Plan announced

The board of directors of Airbus SE has decided on a series of executive changes to ensure an orderly succession in the leadership of the company.

The long-term CEO Tom Enders decided not to seek a further mandate beyond April 2019, when his current mandate ends after 14 years at the helm. At the same time, the company announced that the COO Fabrice Brégier will step down in February 2018 and pursue other interests. His successor will be Gulliaume Faury, who is currently the CEO of Airbus Helicopters.

As a background information to his decision, Enders said that in the coming 16 months he will work with the board to ensure a smooth transition to the next CEO. Also, he plans to focus on business challenges and will further progress and strengthen the ethics and compliance programmes. Earlier this year, Airbus released that the investigations initiated by the UK´s Serious Fraud Office and France`s Parquet National Financier following self-disclosure by Airbus to the UK authorities are ongoing. The outcome of these investigations could have a material impact on the financial statements, business and operations of Airbus. 


Deutsche Börse: New CEO appointed

The supervisory board of Deutsche Börse has appointed Theodor Weimer as the new CEO of the company with effect of 1 January 2018 for a period of three years. This appointment follows the resignation of Carsten Kengeter with effect of 31 December 2017, which came with the explanation that this step would allow the company to focus its energy back onto clients, business and growth and to avoid further burdens caused by the ongoing investigation.

The news release did not indicate any intentions of the members of the supervisory board to join Mr. Kengeter´s initiative.



Pfeiffer Vacuum Technology: CEO Manfred Bender dismissed with immediate effect

The supervisory board of Pfeiffer Vacuum Technology decided unanimously to dismiss Manfred Bender from his position as CEO with immediate effect for important reasons on November 27th, 2017. However, the company did not disclose the reasons for this decision.

In October 2017, the district court of Wetzlar appointed Ms. Ayla Busch as a member of the supervisory board and since Ms. Busch took over the chairmanship pf the supervisory board. Pangea GmbH, a company owned by Busch SE, made a takeover offer for Pfeiffer Vacuum Technology in June this year.


Covestro appoints new CFO

With the appointment of Dr. Thomas Toepfer as the new CFO, Covestro´s supervisory board finally closed an important gap in the management team. The new CFO will be released from his current position as CFO of KION effective 31 March, 2018.

After the surprising resignation of the former CFO Frank H. Lutz in June this year, the CEO Patrick Thomson had to take over finances and act as an interim CFO. A few days ahead of the resignation of Mr. Lutz, Covestro did announce that Patrick Thomson will complete his contract as expected on 30 September, 2018, while Dr. Markus Steilmann has been appointed as his successor.





Capital News


STADA Arzneimittel AG: Final chapter in the takeover bid started

The turbulent takeover of STADA by Bain and Cinven (the “investors”) entered its final stage with the publication of the conclusion of a profit and loss transfer agreement between STADA as the controlled company and Nidda Healthcare GmbH as the controlling company. Nidda is the investment vehicle of the two instutional investors. The agreement offers outstanding shareholders in STADA a cash compensation of 74.4 EUR per share. In addition, the agreement provides for a recurring compensation payment of 3.82 EUR gross (3.53 Euro net at current tax rates) per share for investors who want to stay as shareholders instead. The initial price offered by the investors amounted to 66.25 EUR per share. This bid resulted in the acquisition of approximately 64.5 percent of the equity of STADA. A substantial block of the outstanding shares are held by Elliott (Paul Singer). The profit and loss transfer agreement is subject to approval of a planned AGM.


Steinhoff International: Shareholders are advised to exercise caution

These are turbulent days for everybody involved in Steinhoff. On 6 December 2017 the supervisory board advised that new information has come to light which relates to accounting irregularities requiring further investigation. On the 14th, the supervisory board formed the view that based on section 2:362 (6) of the Dutch Civil Code the 2016 consolidated financial statements will need to be restated and can no longer be relied upon. At the same time, recent weeks saw several changes in the management team, and rising concerns with banks. Hence, at a meeting with its bankers on 19 December 2017, the company admitted that “the recent announcements have had a destabilizing effect on the group that will need to be addressed in order to preserve value for all stakeholders.” With a total debt of 10.7 bn EUR as of 14 December 2017, it is therefore not a bad conclusion that “continuing support from the group´s creditors and other stakeholders will be required to maintain stability and to provide the required time to address the current issues and preserve value for all stakeholders”.


Uniper SE: Not (yet?) in love with Fortum

This month, Uniper disclosed its earnings targets for next year and the dividend policy. While the outlook for 2017 has been confirmed with an EBIT auf 1.0 to 1.2 bn EUR, the effects of the sale of assets will contribute to a decline of the adjusted EBIT to 0.8 to 1.1 bn EUR. At the same time, though, the company announced that the dividend proposal for next year shall be 25 percent up on this year. Furthermore, Uniper expects to raise dividends until 2020 by an average 25 percent per year. At the same time, management confirmed its view on the voluntary public takeover (at 22 EUR a share, including 0.69 EUR dividends) offer from Fortum. In a joint statement on this offer, Uniper´s management board and its supervisory board came to the conclusion that the offer does not reflect Uniper´s true value, Also, according to the statement there is no recognizable contribution to a better development perspective for Uniper. While this sounds a bit like the usual “please do not touch”-wording, a new player entered the scene and might well contribute to a higher offer price at the end. According to a voting rights announcement published on 19 December, the Paul Singer controls 7.38 percent of the voting rights. It is not really likely that this investor is interested in a regular dividend increase.


BASF underpins commitment to agriculture

Agriculture has always been an important part of BASF´s portfolio. But in retrospect, one gets the idea that it never was in the forefront of the strategic planning. For example, the competition regrouped to form so-called integrated businesses, combining seeds, chemicals and more recently information technology over the course of recent years, leaving only marginal room for the remaining smaller and midsized independent players for profitable growth.

With the announcement of the acquisition of Monsanto by Bayer, it became apparent that BASF had to come to a decision about the future of its agriculture business. Hence, the agreement to acquire significant parts of Bayer´s seed and non-selective herbicide businesses by BASF did not come as surprise. The deal demonstrates once more the clever orchestration of the Monsanto-acquisition, with Bayer receiving Euro 5.9B for the sale of businesses with a sales volume of Euro 1.3B and an EBITDA of around Euro 385M for 2016. Needless to add that it is subject to the closing of Bayer´s acquisition of Monsanto.


K+S Group provides a very long term perspective

Shareholders of K+S Group are probably very patient people, waiting for longer-term orientations from time to time. And typically they tend to look into the future. But occasionally it is worthwhile to pay attention to the recent past. One year ago, the K+S management explained to shareholders at the AGM that a discussed takeover bid at 41 Euro was not sufficient. Since, a mixed news flow kept the share price well below this line. What is more, in August K+S announced that the target “of achieving consolidated EBITDA of around € 1.6 billion in 2020 is not realistic anymore”.

This is not the kind of news flow shareholders are looking for. But with the recent publication of its “Shaping 2030” Group strategy”, K+S replaced this picture with new long-term expectations for its shareholders. The new strategy goes to “reposition a manufacturing-driven company into a market-focused, customer-focused enterprise”. K+S expects an annual positive earnings effect of at least € 150 million p.a. by the end of 2020 and plans to become Free Cash Flow positive by 2019. The indebtedness (Net debt/EBITDA) is to be halved by 2020, helping to regain an investment grade rating in 2023. So far, so good, but the real news is the ambition for 2030: € 3 billion EBITDA with at least 15% Return on Capital Employed.

Unfortunately the share price did not react on this news and remained at approx. 21 Euro. But well, at least shareholders with a long term investment horizon can relax. With 2030 in mind, even an average of 5% p.a. should be sufficient to surpass the 41 Euro line.


Thyssenkrupp: Combination of European steel activities with Tata Steel

Thyssenkrupp announced the signing of a memorandum of understanding with Tata Steel to combine their European steel activities in a 50/50 joint venture. The new entity is set to have pro-forma sales of about 15 billion Euro and a workforce of about 48,000. Shipments are envisioned to be about 21 million tons a year. The expected annual synergies are 400 to 600 million Euro.

The transaction with an expected closing towards the end of next year has been expected for a while and tackles the structural challenges of the European steel industry. At first glance, this looks like a great transaction for both partners. But pay attention to the details, since 50/50-constellations tend to be unstable. Also, the move means a lot to thyssenkrupp´s corporate culture. There are definitively more chances than risks involved. Nonetheless, investors are probably well advised to keep an eye on the corporate governance aspects, though.


E.ON: Not everybody embraces Fortum

Shareholders reacted positive on the recent publication of so-called advanced negotiations regarding an agreement according to which the company would have the right to decide to tender its remaining Uniper stake in the course of a public takeover offer by Fortum in early 2018, offering the opportunity to dispose of its 46.65 % holding in Uniper SE. Fortum`s offer (to all Uniper shareholders) would comprise a cash consideration with a total value of 22.00 Euro per share.

Despite the positive reactions of its shareholders and the share prices of the companies involved, the Uniper CEO demonstrated a cool stance, stating that “this unsolicited takeover offer is clearly not in line with the strategy of Uniper as recently reiterated publicly.” Uniper is currently not in discussions with either of Fortum or E.ON in regard to the unsolicited and conditional transaction proposals described in their respective statements. If and when appropriate, the Supervisory and Management Boards of Uniper will evaluate any forthcoming specific proposal in detail and in the interest of the company and all its stakeholders.

Dear Mr. Schäfer, there is no need to hide behind unspecific and unknown interests of the company and all its stakeholders. This type of encrusted bureaucratic statements may have been ok in the old days as a monopoly player. Not any more, sorry.


zooplus AG: “Investing in accelerating growth” sends the share down

The leading online retailer for pet supplies published a very clever profit warning. According to the news, the company plans to invest more heavily in acquiring profitable new customers to achieve a sustainable acceleration in sales growth. As a “result”, the management board of zooplus AG decided to revise its 2017 full-year target range for earnings before taxes (EBT) from Euro 17 – 22 M to a single-digit million amount.

So, the year is nearly over, and as a result of the decision to invest an amount of perhaps Euro 15M gets lost? Maybe, but the share price reaction tells us that shareholders did not buy the story. Besides, how can you “significantly accelerate the company`s growth in the third and fourth quarter”, if at the time of the announcement (i.e. September 15th) the third quarter is nearly over and the company still “plans to invest more heavily”?