A Busy Year for M&A
2018 was a very strong year for M&A in Switzerland. With almost 500 transactions, whereof more than 150 involved private equity investors, the number of transactions surpassed even the record year of 2014. Overall transaction value was USD120 billion, marking a slight increase on 2017, but due to the lack of mega deals did not reach the record level of 2014. The number of outbound transactions was almost twice as high as the number of inbound transactions and in terms of transaction volume, Asia was the main source for acquisitions of Swiss companies.
Activists Playing a Key Role with Limited Instruments
Compared to 2017, shareholder activist campaigns were hardly conducted in 2018. However, shareholder activists are still a significant force in Switzerland: in some midsized listed companies, they requested that representatives be elected as members of the board of directors and/or that certain rules in the articles of association be amended to the effect that the exercise of shareholder rights be facilitated (such as a lower threshold for the request that an agenda item be included in the invitation).
The instruments available to shareholder activists in Switzerland are rather limited. They can request from the board of directors that some agenda items are included in the invitation to a shareholders' meeting or, if the shareholder owns a stake of at least 10%, that an extraordinary shareholders' meeting be held. These rights are, however, limited to requesting votes on issues that can be decided by the shareholders. As the powers of a shareholders' meeting are limited, in most cases requests of activists are focused on the board composition, or, as in the case of Clariant, activists simply build a large stake and try to exert pressure on the board of directors by other means. Given that such other means are limited in Switzerland, short-term-oriented activists are often seen in special situations only. Long-termoriented activists are forced to be represented on the board of directors due to the limited legal instruments available to activists in Switzerland.
Shareholders Keen to Retain a Stake in the Future
Another trend seen lately is that existing shareholders do not want to exit in the context of a going private transaction, but rather to remain invested in some way. The takeover of the SIX-listed Actelion by the NYSE-listed Johnson & Johnson, for example, involved the creation of Idorsia, a spin-off keeping Actelion's drug discovery and early clinical pipeline that was listed on SIX in June 2017. The founder and CEO of Actelion, Jean-Paul Clozel, is the CEO of Idorsia and together with his wife holds over 25% of Idorsia. Another example where former shareholders remained invested was the public takeover of ImmoMentum, a real estate company that was listed on the BX Berne eXchange. Four shareholders, who together held 15.22% of ImmoMentum, contributed a certain number of their ImmoMentum shares to the offeror at the offer price and in turn received shares of the offeror. Finally, this trend also seems to have been established in private M&A transactions. When, in April 2017, the Kuoni Group, which since a public takeover in 2016 has been controlled by EQT, sold the B2B bed bank GTA to the Spanish Hotelbeds group, it announced that the Kuoni and Hugentobler Foundation would keep a stake in the combined Hotelbeds/GTA business.
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