2023-05-17 16:36:00
Dhe multi-billion takeover bids made to the shareholders of Software AG dominated the mood at the Annual General Meeting in Darmstadt on Wednesday – and it was quite aggressive at times. The institutional stakeholders, especially those representing small shareholders, wanted openness and transparency in a bidding war that might last a long time; they wanted clarity on recent board decisions; about the long-term path taken by the German IT house; and above all they cared about the money.
Because the board of directors and a takeover committee formed by the supervisory board are still in favor of a takeover bid by the US technology investor Silver Lake. However, at 32 euros so far, this offer is below the competing offer of at least 34 euros from the competitor Rocket Software, which is backed by the well-funded shareholder Bain Capital. “Please explain to us how such a recommendation can come about,” asked Martin Weimann from Berlin, who claims to represent the interests of several shareholders.
“What must not happen is that Software AG is plundered,” shouted Andreas Schmitt from the Protection Association of Investors (SdK) in the crowded hall. Christian Strenger, Professor at the Frankfurt School of Finance and Management, who in his own words spoke on behalf of “substantial shareholders”, explained in front of the podium that the preference for the lower offer was at least in need of explanation. If these explanations were not forthcoming or were unsatisfactory, he announced further steps: “If necessary, we cannot spare you a special test,” he says.
“The shareholders decide, not you”
There is still no official offer for Software AG. However, small shareholders criticized the fact that the board of directors and the takeover committee of the supervisory board spoke out in favor of the offer from the financial investor Silver Lake very early on and unequivocally. Bain wants to put more money on the table and also take a look at the books. But the board has so far refused to do so. “However, there is a duty of neutrality,” Weimann addressed his word to the board. “You have to give Bain a fair chance. The shareholders decide, not you – you are only their trustee. You need to identify the best offer for all shareholders – not just a select few. Schmidt from the SdK also referred to this and asked: “Why was Bain’s last offer rejected so quickly?”
In their response, the Executive Board and Supervisory Board pointed out that they had examined all offers in detail and, after thorough consultation, had made their recommendations – and that was in Silver Lake’s favour. Almost a year and a half ago, the technology and financial investor subscribed to a convertible bond from Software AG for around 350 million euros, then filled two positions including chairman of the supervisory board and in mid-April expressed his interest and offer for a total of 2.4 billion euros to take over the whole company made. If the takeover is successful, the Darmstadt IT house will be taken off the stock exchange and repositioned. The previous management should remain in office, the headquarters should remain in Darmstadt.
votes against discharge
Since the general meeting will not vote on a takeover, shareholder representatives announced that they would vote against the discharge of the board of directors and the supervisory board. Cheers rang out in the hall. The absence of the Chairman of the Supervisory Board, Christian Lucas, was also widely criticized by several shareholders. As one of the leading managers of Silver Lake and head of the Supervisory Board of Software AG, he plays a central role in the current situation. Therefore, he should have appeared at the general meeting and given questions and answers – but he didn’t. “This is disrespect for shareholders,” said Professor Strenger. Software AG did not want to provide any further information on the reasons for the absence.
Earlier in his speech, CEO Sanjay Brahmawar once again backed Silver Lake’s offer. “The offer is in the best interests of all shareholders,” he said. Brahmawar does not consider Bain’s counter-offer, which was described as non-binding, to be better and more binding. As the panel later explained, this is also the reason why Bain and Rocket Software have not yet made an offer got deeper insights into the books (due diligence) of Software AG.
Brahmawar said Silver Lake’s offering should be formally presented to shareholders in the coming days. The price associated with the offer is then also checked by external consultants. Silver Lake has already secured 30 percent of the shares through a binding agreement with the previous main shareholder, the foundation of company founder Peter Schnell, as well as share purchases on the stock exchange. Bain comes to around 10 percent through Rocket Software and various financial instruments. Institutional investors such as Schroders and Harris Associates, both of which together hold 7 percent of Software AG’s shares, like many small shareholders, are in favor of at least examining Bain’s or Rocket’s offer more closely.
#Software #plundered