Advantage AMS in the bidding fight for Osram


Dhe does not shake optimism by Alexander Everke and Michael Wachsler-Markovich. Despite many doubts, the Chairman of the Executive Board and the CFO of the Austrian sensor manufacturer AMS are convinced that their takeover bid will fly for Osram; Too much of the facts presented by them and the strategic logic in the end would convince all stakeholders, especially the investors. In contrast to the opposing offer of the financial investors Bain Capital and Carlyle Group sets AMS on a common basis in the shareholder structure: Shareholders of Osram are in fact involved in AMS.

Rüdiger Köhn

At first, however, it will be tight in terms of time: By no later than Friday, Osram's board of directors will have to cancel the standstill agreement with AMS so that the takeover offer can start. "We're talking openly with the board, and I expect the release will be timely," said Everke to F.A.Z. on Tuesday. But another day has passed, at least until the editorial deadline of this issue there was no corresponding decision. As reported (F.A.Z. of August 13), the agreement on secrecy was made so that the interested party from Premstätten near Graz can see the documents from Osram. The Munich-based lighting technology group has so far described the financing concept of AMS only as "binding and sustainable", they will hold talks on the merger agreement.

Overlapping shareholders as trumps

The deadline results from the prescribed procedures. The Austrians have to submit their takeover bid of EUR 38.50 to the Osram shareholders before September 5. Until then, the offer runs over 35 euros of American financial investors Bain and Carlyle. Previously, the German stock exchange supervisory Bafin must examine the offer up to ten working days. Observers expect that the Osram executive committee under the chairman Olaf Berlien will decide in time to release. Otherwise, the management would have to be accused of not acting in the interests of the shareholders. So far, the management has been hostile to the Austrians and favored the concept of financial investors who want to continue their own Osram headquartered in Munich. This is not the case with AMS.

Even the high set minimum acceptance rate of 70 percent, as they have also set Bain and Carlyle, see the AMS boards calm. "We are convinced that we will reach them," said the Chief Financial Officer Wachsler-Markowitsch. In the bidding dispute, the shareholder now has the choice to get 10 percent more. And he drew a trump card: "We have overlapping shareholders." Because according to his estimates, AMS owners could hold between 20 and 25 percent Osram shares. Even more: Allianz Global Investors (AGI) holds more than 3 percent of Austrians traded on the Swiss Stock Exchange.

Board members speak of a solid basis

This is bad news for Bain and Carlyle. Last week, AGI, the largest Osram shareholder, had rejected its offer as too low at 9.4 percent, which is likely to send a signal to other institutional investors and fail the offer made by financial investors. Also the Swiss bank UBS, which secures the bridge financing with the HSBC for an Osram acquisition over 4.2 billion euro, is AMS shareholder – and since last week with 6.8 per cent as Osram owners registered. Despite the optimism of the AMS board, the hurdle for 70 percent of shares to be bought will be difficult for the Austrians. Bain / Carlyle as the Austrians know: At least the share must be at least as high as to master Osram and take it out of the stock market. Otherwise the plans will not work out. The financial investors are with their offer of 3.4 billion euros and a company value (with debts) of 4 billion euros by 300 million euros under the AMS with 3.7 and 4.3 billion euros.

Nonetheless, the Boards emphasize that they have a solid foundation, also with regard to financing. "A big advantage for us is that we have and generate our own financial strength," says the CFO. "We have a better financing structure," says Wachsler-Markowitsch, referring to the high interest rates of 7.75 to 9.75 percent that Bain / Carlyle has to deal with.

Side thrust on the strategy of Berlien

In addition, for the necessary investments in the new AMS / Osram Group with a combined turnover of 5 billion euros (of which only 1.4 billion euros from AMS) from next year, the positive free cash inflow will also be available as an important source of financing. Osram would also make positive contributions again after the burdens of high investments of the past few years diminish. Research and development expenses of 10 to 12 percent of sales would remain absolutely high. The unique, over two years distributed integration costs of 400 million euros to accomplish so.

What makes AMS better with Osram than the financial investors? CEO Everke is sure that the strategy is convincing, the sensor technology with the modern technologies in the lighting sector, for example, with the micro-LEDs – so bright, energy-saving mini-LEDs would open up new markets; when it comes to the placement of smartphone displays. With the new technology, so many more sensors could be installed and thus new applications created.

He could not spare a swipe at the strategy of Berlien. "Osram had a different strategy and vision with an offer," he points out to the mass production of LED chips. "We have always relied on highly profitable products in new applications that were not in sight just a few years ago."

(TagToTranslate) Alexander Everke (t) Michael Wachsler-Markovich (t) Olaf Berlien (t) AMS (t) Osram (t) F.A.Z. (t) AGI


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