Ams, the Austrian sensor company that recently acquired Osram, today said that it hopes to clear legal constraints by the end of the year that are impeding the full integration of the two separately-listed outfits into one company. The announcement came as ams reported quarterly gains and Osram reported losses.
Ams closed the long and winding acquisition on July 9, but failed to acquire enough shares in Munich-based Osram to gain “domination” under German law. It needed 75% but had garnered around 69%. As of today it reported it has nudged up to 71%, still short of domination.
Without a “domination and profit and loss transfer agreement” (DPLTA), German law hinders the integration of the two publicly-held companies.
Until ams dominates, Osram is required to treat ams and the shareholders of Osram’s remaining 29% equally, a reality that Osram CEO Olaf Berlien has noted is a sticking point to integration as LEDs Magazine reported previously.
Ams reaffirmed those constraints today, noting that a DPLTA would be the vehicle in which it will “be able to drive and accelerate the integration and alignment of ams’ and Osram’s businesses in the most efficient way to build a strongly profitable combined company within the next years.”
The company is thus redoubling efforts with the aim of bringing Osram fully in house by the end of the year.
“Ams has declared the intention to pursue a domination and profit and loss transfer agreement for Osram and is driving towards implementing this step,” it said today. “As ams is keen to realize this agreement in a timely manner ams is already engaged in required preparations. Based on these and ams’ current assessment, ams regards an implementation of a DPLTA broadly around year-end 2020 as a feasible timeline following required approvals. Ams will provide further information on the timeline and the steps involved as this information becomes available.”
For now, ams said it is integrating Osram “on the basis of ams’ majority share ownership,” rather than on a more effective domination basis. It also noted that “Osram will remain an independent majority-owned listed subsidiary of ams until additional steps such as a DPLTA are concluded and implemented.”
While ams is trying to accrue more Osram ownership, it also said in February that it will seek another path to domination by simply asking non-ams Osram shareholders to approve ams domination in a vote. LEDs has asked ams several times in recent months — including today — for an update on that plan, but we have yet to receive a reply.
In a call with analysts today, Osram CEO Olaf Berlien said that while the two companies are discussing integration, they cannot implement it until domination by ams.
“We do not have an integration today,” Berlien said. “The integration can start after the domination agreement.”
He made his remarks while reporting on Osram’s fiscal third quarter ending June 30. Revenues in the coronavirus pandemic tumbled 28.7% (29.4% on a comparable basis) to €606 million ($714M) from the same quarter a year earlier, and the company reported an after tax loss of €140M ($165M). The company cited the coronavirus pandemic as the reason for the decline.
The loss on an EBITDA basis before special items was €27M ($31.81M), which the company described as “well above expectations.” The revenue decline was also below the possible high-end 35% decline that Osram had warned of in June.
CEO Berlien described the quarterly performance as a strong one in the health crisis.
“The success of our Covid-19 measures and our liquidity management are clearly reflected in our quarterly figures,” he maintained. “In the third quarter, we already achieved the overall savings that we had forecasted for the whole year. Our business performance shows that we were well prepared for the crisis. In particular, our development in North America and China makes us confident that we will achieve our current forecast for the year despite all adversities.”
Osram stuck by the revised forecast it issued in June, when it said revenue for the year ending Sept. 30 will likely decline by 15‒19% and profits will tumble.
LEDs hopes to provide more detail on Osram’s quarterly report and forecast soon.
Premstaetten, Austria-based ams reported a 13% increase in revenue to $460.3M for its second quarter ending June 30, compared to the same quarter a year earlier. Adjust net profits were $56.8M, up 11.3% from the same quarter in 2019.
Although domination laws are currently preventing full operational integration, ams has started to put its stamp on the Osram supervisory board. From the ams camp, management consultant Hans-Peter Metzler, ams board member Thomas Stockmeier, and ams works council member Johann Christian Eitner have joined. They replace former Osram supervisory board members Roland Busch, Frank H. Lakerveld, and Arunjai Mittal, who resigned.
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).
*Editor’s note: ams reports financials in USD while Osram reports in EUR. Currency is provided at the latest valuation as of time of publication.
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