A long-running saga with more twists than a Chubby Checker dance hall hit a momentous milestone today, as Osram shareholders voted overwhelmingly to grant ams “domination” status in its takeover of Osram.
The measure clears the way for the two companies to more smoothly integrate operations, and gives ams access to Osram cash.
After several starts, stops, and hurdles dating back to at least the summer of 2019, Premstaetten, Austria-based sensor maker ams acquired Munich-based Osram this past July 9.
However, ams failed at that time to acquire enough Osram shares to obtain what German law defines as a “domination and profit and loss transfer agreement” (DPLTA). It needed 75% but had garnered about 69%, a number that would inch up to a still-short 71%. While it has had governing control of Osram, it has lacked all the advantages of full “domination.”
To the frustration of Osram CEO Olaf Berlien and ams CEO Alexander Everke, the shortfall has made it difficult for the two companies to freely discuss arrangements for combining their multifaceted photonics operations, which include some duplicate areas as well as complementary ones.
So Osram and ams in September came up with another way of reaching domination, and scheduled a vote for today at an extraordinary general meeting (EGM) of Osram shareholders, asking shareholders to approve the plan. By law, 75% of voters present at the virtual meeting had to approve. Going into the meeting, the companies could count on 71% approval, coming from the ams camp.
Any resistance would have likely come from the 29% of minority Osram shareholders who had yet to sell to ams.
When the votes were tallied at around 4:40 PM Central European Time today, 99.77% of shareholders at the meeting gave the thumbs up.
Under the agreement, ams is offering Osram minority shareholders €45.54 (US$53.29) per share to buy them out. In a surprise move yesterday — the day before the vote — ams had sweetened that amount by 2%, from what was €44.65 ($52.25).
Ams will compensate shareholders who do not sell with “a guaranteed annual payment of about 5% of the compensation amount,” Osram said, quantifying the 5% as €2.24 net ($2.62) and €2.57 gross ($3.01). The payment lasts as long as the individual continues to hold the Osram shares.
Osram expects the domination to forge better synergies with the company that has owned it since July.
“This will enable Osram and ams together to forge the European global market leader in optical solutions,” Berlien said.
The effect will not be immediate, as procedures still remain. For example, the agreement “must first be entered in the Munich commercial register,” Osram noted while also pointing out that “the operational starting date for the combined company is expected to be in early 2021.”
It is always possible that new snags could emerge — especially given the long and winding history of the acquisition and the domination quest — but nobody at Osram or ams is articulating any such expectations.
The journey to today’s domination approval has included too many stops to completely list here. Among them are:
- An initial bid by ams to acquire Osram that failed in October 2019
- A second bid that won but came up well short of domination
- A scramble for funding by ams to pay for the acquisition, ironically hindered by ams’ lack of access to Osram cash and including selling some of its own shares, as well as floating bonds
- Deliberations on alternative routes to domination, which ams stepped up in July, culminating in today’s approval
Shareholders today also approved three ams-nominated individuals to the Osram supervisory board: ams board member Thomas Stockmeier and ams works council member Johann Christian Eitner, as well as independent management consultant Hans-Peter Metzler.
Osram is scheduled to release its 2020 fiscal year-end results this Friday.
Editor’s note: ams reports financials in US dollars, while Osram reports in Euros. All shares in USD are converted at current value as of time of publication.
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).
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