Disclosure of Ultimate Beneficial Ownership in German Companies

Key Takeaways

  • Germany recently introduced new rules on the disclosure of the ultimate beneficial owner(s) of German companies. The rules are based on the 4th EU-Money-Laundering Directive (EU) 2015/849).
  • The rules are not only relevant for German entities and German shareholders, but also for foreign groups or organizations (including private equity groups) that have or intend to acquire holdings in German entities.
  • Recent experience indicates that not all foreign players eying German M&A targets or holding significant interests in German targets are aware of these rules.
  • If your group or organization
    • has or intends to acquire a direct or indirect holding of more than 25% of the capital or the voting rights of a German entity or otherwise controls such entity, and
    • is beneficially owned or controlled by one or more natural persons,

disclosure obligations with respect to the ultimate beneficial owners may apply and should be assessed. Continue Reading The German Transparency Register

The German M&A market has remained robust in 2017.  While the number of transactions has fallen, transaction volumes remain significant.  Testament to this were the agreed merger of Siemens’ rail operations with Alstom, the acquisition of Bayer’s seeds and herbicides business by BASF, the Stada takeover, General Motors’ sale of Opel to PSA or the merger between Linde and Praxair, which finally appears to be nearing a successful conclusion.  The steel JV between ThyssenKrupp and Tata is still in the works, as is the takeover of Uniper by Fortum.  However, yet another attempt at a London Stock Exchange and Deutsche Börse merger failed in 2017.

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In a recently published decision of November 7, 2017, the German Federal Court of Justice (Bundesgerichtshof) has added another twist to the much debated acquisition of German Celesio AG by US pharma wholesaler McKesson.  McKesson had launched a takeover offer to the free float of Celesio in late 2013, and had entered into a purchase agreement with its then main shareholder Franz Haniel & Cie. to acquire its shareholding of slightly above 50% alongside the takeover bid.  The transaction attracted the interest of Paul Singer.  Elliott acquired a position of approximately 24% in shares and, in addition, convertible bonds of Celesio, and opposed the initial offer due to an alleged undervaluation.  As a result, the initial offer, which was subject to a minimum acceptance threshold of 75%, failed in early January 2014. The 75% acceptance threshold is key under German law, for a bidder to be in a position to exercise control over a German listed corporation and access the cash flows, prior to having effected a squeeze-out of all remaining minorities. Continue Reading Treating Shareholders Equally – Another Chapter in the McKesson/Celesio Saga

On 19 September 2017, the UK Takeover Panel published Panel Consultation Paper 2017/2 (the PCP), which proposed amendments to the rules of the UK Takeover Code relating to statements of intention and related matters. On 11 December 2017, the Panel published Response Statement 2017/2 (the RS) having received responses to the PCP from 13 respondents, including the Quoted Companies Alliance, the International Corporate Governance Network, the Investment Association and the Joint Working Party of the Company Law Committees of the City of London Law Society and the Law Society of England and Wales. The RS summarizes the responses received by the Panel and sets out the changes to the Code that will take effect on 8 January 2018 (including in relation to ongoing bids).

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The German M&A market has fared well over the summer. The Bain/Cinven consortium successfully closed its takeover bid for Stada at the second attempt. Linde shareholders can now accept the exchange offer to merge with Praxair and the Hong Kong-based CK Group wins out in the bidding for smart-metering specialist ista. Toward the end of the third quarter, TyssenKrupp and Tata Steel announce their intention to enter into a steel joint venture. Fortum is working on the takeover of Uniper. Continue reading.

On 29 August 2017, the UK Government published its response to its recent consultation on UK corporate governance reform. The Government has proposed 12 reforms to the UK corporate governance regime, centered around executive remuneration, employee and other stakeholder representation and corporate governance in large privately-held businesses. In this memorandum, we briefly explore each of the proposed reforms.

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For the past several years Cleary Gottlieb has published legal and practical information regarding German public M&A transactions.  For the new edition of the compilation Public Bids and Squeeze-Outs in Germany, a Statistical Survey (2002 – 2016), we have collected and analyzed information related to public bids and squeeze-outs in Germany from January 2002 through December 2016. Continue Reading Public Bids and Squeeze-Outs in Germany, a Statistical Survey (2002-2016)

U.S. and European companies continue to receive bids to sell themselves and their significant assets to companies based in the People’s Republic of China.  Evaluation of these proposals requires due diligence of the acquiror’s ownership structure, assets, cash position, and financing sources.  Moreover, even if this due diligence exercise gives rise to satisfactory results, the continued unpredictability of the PRC government (including its recently enhanced foreign exchange control measures), coupled with the ties of some of these buyers and financing sources to governmental entities in the PRC, as well as the challenges that a non-PRC counterparty faces when seeking to enforce contractual obligations and non-PRC judgments in PRC courts, merit the implementation of an array of innovative provisions in M&A Agreements to protect the seller/target.  Several months ago, we reviewed these provisions in a popular post.  This new post updates that earlier post to reflect recent regulatory developments and the evolution of market practice. Continue Reading An Updated Look at How M&A Agreements Handle the Risks and Challenges of PRC Acquirors

On 7 July 2017, the UK Takeover Panel published Practice Statement No 31, which describes the way in which the Panel Executive normally interprets and applies certain aspects of the Takeover Code when a company wishes to seek bidders for itself, typically via an announcement of a formal sale process or a strategic review that may result in a sale. The publication of PS31 indicates that the Executive intends to be more prescriptive about the application of the Code to auctions conducted by the target company. The key rules of the Code affected by PS31 are Rule 2 (secrecy and announcements), Rule 21.2 (deal protection measures) and Rule 21.3 (equality of information between bidders).

Please click here to read the full alert memorandum.

The German M&A market holds its ground; despite falling transaction volumes, transaction values are on the rise. Q2/2017 sees Fresenius agree both the acquisition of U.S. competitor Akorn and that of Merck’s biosimilars business. John Deere acquires road construction equipment manufacturer Wirtgen. 1&1 Telecommunications and Drillisch are set to be brought under the umbrella of United Internet and German property group TLG presents WCM exchange offer. Continue Reading.