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Deutsche Wohnen:Minority shareholder buyout (DPLTA): Difference between revisions
Deutsche Wohnen:Minority shareholder buyout (DPLTA) (view source)
Revision as of 13:49, 25 September 2024
, 25 September 2024→How Does DPLTA Works?
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== How Does DPLTA Works? == | == How Does DPLTA Works? == | ||
* A DPLTA can initiated by a company once it achieves 75% voting rights (which Vonovia exceeds)<ref name=": | * A DPLTA can initiated by a company once it achieves 75% voting rights (which Vonovia exceeds)<ref name=":3" />. | ||
* 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 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 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" />. | * 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">https://www.pplaw.com/sites/default/files/2020-07/wg-en-2012-squeeze-outs.pdf</ref>. | ||
* 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" />. | * 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" />. | * 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" />. | ||
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== What Happens If Some Shareholders Don't Take Part in DPLTA? == | == 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>https://www.mayerbrown.com/-/media/files/perspectives-events/publications/2020/03/ger-whitepaper-corporate-public-takeovers.pdf</ref>. | * 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=":3">https://www.mayerbrown.com/-/media/files/perspectives-events/publications/2020/03/ger-whitepaper-corporate-public-takeovers.pdf</ref>. | ||
* However, the acquirer (Vonovia) can in future increase its stake to between 90% and 95% and initiate a squeeze-out of the remaining shareholders. Here, the shareholders, will be forced to sell their shares for adequate compensation. A shareholder who owns at least a nominal amount of €1,000 in the target could try to delay the squeeze-out resolution through legal proceedings. However, the German Stock Corporation Act provides for a fast tracking of such proceedings, allowing for a resolution within three to six months. Compensation proceedings are only handled after registration of the squeeze-out<ref name=":1" />. | * However, the acquirer (Vonovia) can in future increase its stake to between 90% and 95% and initiate a squeeze-out of the remaining shareholders. Here, the shareholders, will be forced to sell their shares for adequate compensation. A shareholder who owns at least a nominal amount of €1,000 in the target could try to delay the squeeze-out resolution through legal proceedings. However, the German Stock Corporation Act provides for a fast tracking of such proceedings, allowing for a resolution within three to six months. Compensation proceedings are only handled after registration of the squeeze-out<ref name=":1" />. | ||
* Squeeze-outs are in three forms. A takeover squeeze -out, a merger squeeze-out and a general corporate squeeze-out. A merger squeeze-out can be initiated by the acquirer (Vonovia) once it achieves 90% voting rights. However, it will have to merge with another corporation such as the target and initiate a squeeze-out within three months. A merger will likely result in a real estate tax which is around 6% of the real estate value in Berlin<ref>https://www.pwc.com/gx/en/financial-services/publications/assets/pwc-real-estate-transfer-tax.pdf</ref>. The state tax is estimated at around 1 billion euros<ref>https://www.wiwo.de/finanzen/immobilien/wohnungsunternehmen-vonovia-plant-komplett-uebernahme-von-deutsche-wohnen-was-anleger-wissen-muessen-/30000182.html</ref>. A general corporate squeeze-out requires the acquirer to have at least 95% voting rights in the target. On the other hand, a takeover squeeze-out requires the acquirer to attain at least 95% voting rights in the target and initiate a squeeze-out within three months. The The advantage of this type of squeeze-out is that if the takeover bid was accepted by at least 90% of the shareholders, the offer price offered during the takeover can be considered as adequate compensation. All the other rules mentioned above will apply in these types of squeeze-outs<ref name=":1" />. | * Squeeze-outs are in three forms. A takeover squeeze -out, a merger squeeze-out and a general corporate squeeze-out. A merger squeeze-out can be initiated by the acquirer (Vonovia) once it achieves 90% voting rights. However, it will have to merge with another corporation such as the target and initiate a squeeze-out within three months. A merger will likely result in a real estate tax which is around 6% of the real estate value in Berlin<ref>https://www.pwc.com/gx/en/financial-services/publications/assets/pwc-real-estate-transfer-tax.pdf</ref>. The state tax is estimated at around 1 billion euros<ref>https://www.wiwo.de/finanzen/immobilien/wohnungsunternehmen-vonovia-plant-komplett-uebernahme-von-deutsche-wohnen-was-anleger-wissen-muessen-/30000182.html</ref>. A general corporate squeeze-out requires the acquirer to have at least 95% voting rights in the target. On the other hand, a takeover squeeze-out requires the acquirer to attain at least 95% voting rights in the target and initiate a squeeze-out within three months. The The advantage of this type of squeeze-out is that if the takeover bid was accepted by at least 90% of the shareholders, the offer price offered during the takeover can be considered as adequate compensation. All the other rules mentioned above will apply in these types of squeeze-outs<ref name=":1" />. | ||