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Deutsche Wohnen:Minority shareholder buyout (DPLTA): Difference between revisions
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== How Does DPLTA Work? == | |||
* A DPLTA can initiated by a company once it achieves 75% voting rights (which Vonovia exceeds)<ref name=":1">https://www.mayerbrown.com/-/media/files/perspectives-events/publications/2020/03/ger-whitepaper-corporate-public-takeovers.pdf</ref>. | |||
* The price offered is usually the greater of fair value, weighted price in the past three months preceding domination announcement or price offered to other shareholders in the last six months<ref name=":2">https://www.specialsituationinvestments.com/2020/01/adler-real-estate-adl-de-merger-arbitrage-10-upside/</ref>. | |||
* The dividend to be paid is calculated based on the company's historical earnings and future earnings prospects. A Federal Court of Justice recently concluded that the market value of a company can be used to determine the guaranteed dividend<ref name=":2" />. | |||
* The compensation offered by the acquirer needs to be verified by an independent auditor appointed by the court. The auditor uses a valuation method developed by the German institute of accountants to determine the adequacy of the compensation<ref name=":1" />. | |||
* If the minority shareholders are not satisfied with the price or annual guaranteed dividend, they can challenge it in a court. Based on the cases decided between 2016 and 2019, the court increased the price by around 10% to 30%<ref name=":2" />. | |||
* During the appraisal period, the external shareholders continue to hold the shares and receive a dividend. Eventually, if the court decides that the compensation was not fair, the shareholders receive the difference plus interest of between 0.88% and 5% as at 2019. The court's compensation is usually not less than that offered by the acquiring company <ref name=":2" />. | |||
== What Happens If Some Shareholders Don't Take Part in DPLTA? == | |||
* If some shareholders fail to take part in the DPLTA, they will continue to hold their shares and be entitled to an annual guaranteed dividend<ref name=":1" />. | |||
* However, the acquirer (Vonovia) can in future increase its stake to 90% and initiate a squeeze-out of the remaining shareholders. Here, the shareholders, will be forced to sell their shares for adequate compensation. The compensation will also be verified by an independent auditor appointed by the court. The minority shareholders could try to delay the squeeze-out through legal proceedings. However, such proceedings are only handled after registration and effectiveness of the squeeze-out<ref name=":1" />. | |||
* Once the acquirer (Vonovia) achieves a 90% ownership, it will be required to pay one billion euros to the state of Berlin<ref>https://www.wiwo.de/finanzen/immobilien/wohnungsunternehmen-vonovia-plant-komplett-uebernahme-von-deutsche-wohnen-was-anleger-wissen-muessen-/30000182.html</ref>. | |||
== Past DPLTA Real Estate Actions In Germany == | == Past DPLTA Real Estate Actions In Germany == | ||