, Columnist
Hedge Funds Need a New M&A Playbook in Germany
Bidders are settling for less control over German takeover targets to prevent deals from getting derailed. The result is an unwelcome fudge.
Compromise.
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Merger arbitrageurs once found it easy to force bidders for German companies to pay a full price for a takeover target. But acquirers are adopting a new playbook to keep meddlesome hedge funds at bay. For the German corporate sector, it’s a pyrrhic victory.
The key battle in German M&A used to be over securing a 75% holding — the level that would guarantee pushing through a shareholder resolution on so-called domination and profit-and-loss-transfer agreements. These are the accords that give the majority shareholder direction over strategy and access to the corporation’s cash flow.