📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Hedge funds control 35-45% of Osram shares in headache for suitor AMS: source

Published 11/28/2019, 01:52 PM
Updated 11/28/2019, 01:55 PM
Hedge funds control 35-45% of Osram shares in headache for suitor AMS: source

MUNICH (Reuters) - Hedge funds control 35-45% of the shares of German lighting group Osram (DE:OSRn), posing a headache for Austrian suitor AMS (VI:AMS) as the investors may press for the $5 billion offer to be sweetened, a person close to the matter said on Thursday.

An initial bid by AMS to create a global leader in sensors and lights stumbled last month when it fell short of the necessary shareholder backing. Since then AMS has lowered the acceptance threshold to 55% to try to get the deal over the line, while keeping the offer price at 41 euros a share.

Osram Chief Executive Olaf Berlien told German daily Sueddeutsche Zeitung that some investors seem to have no intention of tendering their shares by the Dec. 5 deadline.

"It appears that a number of hedge funds have acquired shares with the aim of selling them at a later date and at a higher price," he told the newspaper, which first reported the stakes held by hedge funds.

German law allows for courts to determine that minority investors be compensated at a higher price for their shares when an acquirer and a target company strike a so-called domination agreement, which regularly prompts hedge funds to hold back shares aiming to benefit from a deferred sale.

However, if too many speculative investors decide to hold back shares that can lead to deals falling apart, as seen in initial failed attempts for a leveraged buyout of generics firm Stada. That deal eventually went through in 2017 after the offer price was bumped up.

AMS - which already controls 20% of Osram - said on Wednesday that 3.3% of Osram shares have been tendered so far.

On Oct 31, hedge fund Sand Grove Capital Management disclosed a 5.75% Osram stake.

Around 10% of Osram shares are held by exchange-traded funds, which according to German law, are not allowed to sell their stake as long as the takeover is not completed, banking sources have said.

Retail investors, which often ignore tender offers, hold 20%-25%, the sources have said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.