Swiss firms want takeover rules changed
Swissmem, the umbrella body representing the manufacturing sector, is backing proposed regulatory changes that would help firms stave off hostile takeover bids.
Parliament is set to debate whether to make investors reveal their identity once they buy three per cent of a target’s shares. This comes amid intense takeover speculation in the industrial sector.
Current market regulations allow investors to remain incognito if they buy less than five per cent of a company’s shares that come with voting rights. The new proposal would reduce that stake to three per cent before they are forced to rip off the mask.
It would also close a loophole that let potential bidders rack up a further five per cent of options – contracts that come with the right to buy shares if wanted.
Swissmem believes the current conditions make it too easy for speculators to gain close to ten per cent of voting rights in a company before that firm even gets wind of the move.
“This puts the target company at an unfair disadvantage because it limits their capability to prepare a strategy to fend off a hostile takeover bid and to consult with other shareholders,” Swissmem director Hans-Ulrich Bigler told swissinfo.
ABB chief executive Fred Kindle also called for changes to be made at the engineering group’s annual results conference, saying the situation put Swiss firms at a disadvantage compared to other countries.
Oerlikon, Saurer, Ascom
Another connected area to be debated by parliament is the regulations surrounding cash settlement options.
These contracts, as the name implies, usually result in the bearer receiving cash rather than assets on maturity, but they could in theory be manipulated to pay out in shares instead.
As current market rules do not oblige holders of these options to identify themselves there is a fear that they could be used to capture unlimited quantities of shares by stealth.
Foreign private equity groups have been making inroads into the Swiss manufacturing sector over the last two years.
Austrian group Victory Holding have already bought up technology company Unaxis, now named Oerlikon, and then brought machinery manufacturers Saurer into the fold. Last month they also raised their stake to 20.1 per cent in Swiss telecommunications firm Ascom.
Victory co-owner Ronny Pecik was forced to come out into the open last week to calm fears that he planned to strip assets from his recently acquired companies.
His comments followed the recent sacking of Ascom chief executive Rudolf Hadorn after he held secret talks with Victory against the wishes of the board.
Russian billionaire Viktor Vekselberg has also secured a stake in Oerlikon with his company Renova and both groups have made public their intention to buy up more Swiss firms.
Rough deal
Swissmem president Johann Schneider-Ammann told swissinfo that smaller shareholders are getting a rough deal, as investors are able to buy up shares at a relatively low cost under the cover of anonymity than they would if their identity was known earlier.
“It was a little bit unfair the way Oerlikon and Saurer were taken over because of our options situation. New investors could attack the company without being identified which meant they could attain ownership and voting positions at reasonably low payments,” he said.
“Up until now Swiss legislation has been a little more generous than the international standards and we want to close this gap. We are not simply on a track to defend Swiss companies, but we want transparency, fairness and internationally comparable conditions.
“The danger is that huge international capital could be used for speculation and we do not want to have our best companies being traded like products. We want to attract industrial capital, from wherever it comes from, as long as it stays here for a long time,” Schneider-Ammann added.
Corporate lawyer Martin Weber of Schellenberg Wittmer said the changes would merely bring Switzerland into line with established practice in other countries and would only impede the operations of private equity groups.
He added that it would also make it more difficult for speculators to make gains by posing as a potential bidder.
“At present someone could buy nearly 10 per cent of a company’s shares and then sell them at a profit as share prices rise on takeover rumours,” he said.
swissinfo, Matthew Allen
A parliamentary committee has recommended that the share threshold level be lowered from 5% to 3% to trigger a requirement for the investor to reveal their identity.
In addition, it has proposed that options be included in this threshold rather than allow them to be added on top. Parliament will debate the proposals this year.
There are as yet no concrete proposals on how to deal with the issue of cash settlement options.
Most other countries, including the US, France, Japan, and Singapore, as well as Hong Kong, set a threshold of five per cent.
But the ability to also buy up to 5% in options is a position unique to Switzerland.
Britain sets its threshold at 3% and Germany is set to follow suit in the near future.
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