ACTIONS CORNER
GEA Group AG: Advance Payment of Dividend due to Postponement of AGM
Many companies decided to cancel or postpone dividend payments amidst the COVID-19 crisis. Occasionally one gets the impression that this is probably just an excuse for measures to be taken anyhow amidst an already week liquidity position, or even worse, just an imitation of the corresponding announcements by other companies. In light of this, it is very much appreciated when a company takes on a pioneering role and takes the right measures.
Similar to many other companies, GEA decided to postpone this year´s AGM, which was originally planned for April 30th, 2020. The argument for this move did not come as a surprise: “The health of the company´s shareholders, employees and the service providers involved takes the highest priority.” Instead of postponing the AGM, GEA could have opted to hold a virtual event. This decision was based on the expectation of an especially high number of questions at the AGM in conjunction with the COVID-19 crisis.
The company confirmed the dividend proposal of EUR 0.85 per share as published in its 2019 annual report. However, in light of the decision to postpone the AGM, the Executive Board and the Supervisory Board of GEA also decided to pay the maximum possible advance payment of EUR 0.42 per share. This advance payment is set for May 6, 2020, when payment of the full dividend was originally planned. The AGM is expected to be held at the end of 2020.
RIB Software SE: This sounds like a Deal!
For many investors, the uncertainty triggered by COVID-19 is a major problem. Not so much though for the shareholders of RIB Software, since at least the options are clear.
Sometime before the dimensions of the crisis became apparent, Schneider Electric announced its intention to launch a voluntary public tender offer to the shareholders of RIB. On March 20th, 2020, the German subsidiary Schneider Electric Investment AG published the offer document. The bidder wants to buy all RIB shares at the offer price of EUR 29 per share with the intention to settle the transaction until the end of June 2020.
If the offer is settled before RIB´s 2020 AGM, shareholders who accept the offer will not receive a dividend for the financial year 2019. The expected dividend payment is EUR 0.12 per share, while the AGM is scheduled for May 13th, 2020. The offer period began with the publication of the offer document on March 20th and ends on April 22nd, 2020. Following section 16 para 2. WpÜG, shareholders that have not accepted the offer within the acceptance period may still accept the offer within two additional weeks, provided that the minimum acceptance threshold of at least 50% plus one share has been reached. On April 3rd, Schneider announced in this regard that the acceptance rate as of this date was 30.02%.
Great, finally we see a transaction where everybody involved looks like a winner. Investors get paid at a pre-crisis valuation, RIB gets access to Schneider´s resources, and Schneider can pursue its strategic goals. And last but not least, the lawyers did their homework on the deadlines!
Volkswagen AG: VW does its Homework
Experienced investors know the game: As soon as there is boredom at the equity markets, you can be sure that somebody brings up the idea of a squeeze-out of the non-controlling shareholders of AUDI. It, therefore, sounds almost like a fairy tale that VW has actually decided to take this step. And not only that, the same fate awaits MAN shareholders. But like in every good fairy tale, there is an evil spirit here too.
Both companies made the respective announcements on February 28th. In the case of MAN, the bidder is TRATON SE, the Group´s listed commercial vehicle producer. TRATON, which currently owns 94.36% of the outstanding MAN shares, informed MAN that it intends to simplify the overall Group´s structure. As part of this initiative, a merger with MAN SE is planned and TRATON wants to execute the procedure for transferring the shares held by the non-controlling shareholders of MAN to TRATON in consideration of payment of an appropriate cash settlement (squeeze-out).
AUDI is supposed to take the lead for research & development within the Volkswagen brand alliance. In the context of the related reorganization of competencies and responsibilities, Volkswagen also plans to carry out a squeeze-out to acquire the 0.36 percent of AUDI´s shares not yet controlled.
So far, this looks like a standard business. But here comes the evil spirit: What will be the implications of the COVID-19 crisis on the timing and procedure of the squeeze-out? Both target companies postponed already their AGMs, and both had a strong extraordinary impact on the operating business.
Sixt SE: Conditional Sale of its holding in Sixt Leasing SE
On February 19th, 2020, Sixt announced “with a view to respective media reports published today”, that it is in negotiations with Hyundai Capital Bank Europe GmbH (a joint venture between Santander Consumer Bank AG and Hyundai Capital Services Inc.) regarding the sale of its participation in Sixt Leasing SE at a proposed sales price of EUR 18 per share, plus dividend for the year 2019.
Two days later the company announced that “it counts on consistent growth through further digitization and internationalization of its core business”. While this news may have come as a surprise to some investors, the additional confirmation of the sale of its entire stake in Sixt Leasing SE had only limited news value amidst the prior news release. The parties agreed on the sale of 41.9% of the share capital of Sixt Leasing SE to Hyundai Capital Bank Europe GmbH, which presently is a fully consolidated subsidiary of Sixt SE, at a price of EUR 18 per share, resulting in a total consideration of EUR 155.6 million. Also, Sixt SE will be entitled to a dividend on the for the year 2019 of up to EUR 0.9 per share on the shares sold. The transaction is expected to generate a mid-double-digit million EUR extraordinary pre-tax profit at group level.
In connection with this transaction, Hyundai Capital Bank Europe GmbH announced its decision to make a voluntary public takeover bid to all shareholders of Sixt Leasing SE at an offer price in cash corresponding to the above purchase price. The completion of the sale of the participation of Sixt SE in Sixt Leasing SE is subject to the condition that Hyundai Capital Bank Europe GmbH reaches an acceptance quota of at least 55% of all outstanding shares in Sixt Leasing SE (including the participation of Sixt SE) via the takeover bid. Furthermore, it is subject to Hyundai Capital Bank Europe GmbH having secured the financing for the transaction and the usual merger control and regulatory clearances. Sixt SE expects the sale to be completed in the second half of 2020.
RHÖN-KLINIKUM AG: End of a Ceasefire
The struggle for control of RHÖN-KLINIKUM that has been going on since 2013 seems decided with the pooling of the shareholdings of the founder, Eugen Münch, Ingeborg Münch and HCM SE and Asklepios Kliniken in a joint venture. The pooled positions total almost 50% of RHÖN-KLINIKUM´s share capital.
A few days after the announcement of the formation of this joint venture, RHÖN-KLINIKUM AG confirmed receipt of a proposal to submit a voluntary public takeover bid by Asklepios Kliniken GmbH & Co. KGaA for all outstanding shares of the company for a cash consideration of EUR 18 per share.
Since the management of RHÖN-KLINIKUM was not involved in this transaction so far, the company did not provide additional information in this regard. However, according to Mr. Münch, it became necessary to act now to resolve the deadlock among the company´s owners and give RHÖN-KLINIKUM some much-needed momentum. As regards the takeover bid, Asklepios clarified that this transaction will not feature any minimum acceptance threshold and will solely be subject to merger control clearance by the German Bundeskartellamt. The transaction is expected to be completed in the second quarter of 2020.
With the bundling of forces, the numbers 2 and 3 in the German market would join forces, while Fresenius Helios remains the undisputed market leader.
Villeroy & Boch AG: Irritation among the Shareholders
This could have been so nice: Contrary to all rumors about difficult times for the business, the Management Board and the Supervisory Board of Villeroy & Boch AG announced the intention to propose an unchanged dividend of EUR 0.55 per ordinary share and EUR 0.60 per preference share for the year 2019 in February. And a few weeks earlier, the company even media speculation that it is considering an acquisition of the Ideal Standard group.
But soon thereafter things changed with the appearance of a Swiss investor. Lake Street Capital not only rejected the considered acquisition of Ideal Standard, but even sees it as an existential risk. According to the investor, the management would be well advised to focus instead on the disappointing business of Villeroy. As regards the dividend, Lake Street asked for EUR 1.45 per ordinary and EUR 1.50 per preference share, resulting in a total dividend payout of EUR 39 million. According to the investor, sufficient funds would be available for such distribution since Villeroy had made EUR 88 million in 2019 by selling a plant in Luxembourg. However, this money would then no longer be available to finance the takeover. The Management Board of Villeroy indicated that they would comment on the countermotion at the AGM, which at the time was scheduled for March 27th, 2020. And here it comes again: Like many other companies also Villeroy & Boch had to postpone the AGM, which is “to be rescheduled to a new date within the eight-month period of the current financial year.”
Presumably, the Management Board of Villeroy took a deep breath. Since the proceeds from the sale of the plant are still on the books, there should be now plenty of time to wait until the owners of Ideal Standard are ready to sell at a fair price and even find a solution to satisfy all shareholders.