“The activity and influence of shareholder activists in Germany is continuously heating up. Activists are now more experienced and have a track record of successful cases. The challenge is well established on the agendas of top management and boards in Germany. Recent targets have primarily been small- and micro-cap companies but large-caps may also become a target.”
Michael Reinert, Senior Managing Director
Country:
Germany
Average % of insider ownership:
Activism
Threat Level
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Shareholder activism in Germany has progressed over the past few months particularly in small- and mid-cap companies. The increase is driven by a multitude of available German target companies with a wide free float, relatively low average attendance at general meetings, and an increasingly professional approach by activist investors who have increasing support from institutional shareholders. Campaigns by activist investors are mainly focused on structural changes and value enhancement; however, German M&A regulations create a unique environment for activists engaged in “squeeze-out” activism.
Shareholders reaching, exceeding, or dropping below a three percent threshold must disclose their voting interests within four business days.
Disclosure of information on aims, origin of funds, and planned influence on the management of the company is required if the voting interests reach or exceed 10%.
Management is generally ring-fenced by the two-tier management board/supervisory board structure, hence nominations for the management board cannot be proposed by shareholders (they are appointed by the supervisory board). But current cases demonstrate that this is not a guarantee.
Preventive structural defenses include preference shares (non-voting shares), restricted transferability of registered shares, supervisory board protection via 75% threshold for deselection on annual meetings or staggered terms of members of the supervisory board, but both are under scrutiny from institutional investors.
Companies have other strategic options such as share buybacks, divestment of non-core assets, growth via acquisition of a compatible asset, an increase of authorized capital, or winning an anchor shareholder.
Top Campaigns by Type
1. Removal Of CEO Or Other Board Member
2. Remuneration
3. Misleading Accounting
Campaigns By Year
Total
Campaigns
Notable Invested Activists
• Cevian Capital
• Elliott Management
• Satora Beteiligungs GmbH
Recent activism campaigns
| Deutsche Bank | VS. |
C-Quadrat |
| Volkswagen | VS. |
Hermes Investment Management (Hermes Equity Ownership Services EOS) |
| Schaltbau Holding AG | VS. |
Active Ownership Capital |
Total Active
Campaigns
Contact FTI Consulting
Capital Markets Research and Activist Engagement
Managing Director
+1 312 861 4721
Geoff.Serednesky@FTIConsulting.com
Chairman
+49 69 920 37 100
Michael.Reinert@fticonsulting.com
Senior Managing Director
+49 69 920 37 110
Lutz.Golsch@fticonsulting.com