German shareholder group DSW mustering shareholders over €3.1bn Rhön-Fresenius deal

Unusual call for extraordinary general meeting over company sale

German shareholder association DSW is mustering shareholders unhappy at the proposed sale of 70% of clinic operator Rhön-Klinikum to healthcare giant Fresenius in a sign of a growing investor appetite for holding corporate Germany to account.

In mid-September Rhön, which is listed on the mid-cap MDax index, announced it would sell 43 clinics and 15 outpatient facilities in Germany to Fresenius for €3.1bn. The deal is expected to close by the end of December.

The DSW claims that Rhön’s shareholders should have been consulted prior to the announcement. It recently wrote to Rhön’s management to demand that the firm hold an extraordinary general meeting (EGM) so that shareholders can be fully informed about the sale. RI understands that Rhön would not, however, have to put the sale to a shareholder vote.

Even so, Rhön rebuffed the DSW’s demand. Citing a recent ruling by the Federal Court of Justice, a spokesman said that as Rhön was only selling 70% of its assets to Fresenius, it was still under the 80% threshold required to inform shareholders about the sale.

The DSW countered that the ruling only applies to cases where a firm spins off assets into a subsidiary. “In the case of Rhön, we’re dealing with a sale which is final,” said DSW managing director Marc Tüngler.The DSW now aims to mobilise enough Rhön shareholders to force an EGM. “To achieve this, we need to find shareholders with 5% of firm’s capital,” said Tüngler, adding that that would not be difficult. Düsseldorf-based DSW has asked Rhön shareholders upset over their treatment to get in contact.

Rhön’s founder Eugen Münch and his family own 12.5% of the company. Other major shareholders include medical supplies maker B. Braun Melsungen (11%), Swedish pension provider Alecta (9.9%) and the hospitals operator Asklepios (5%). The other 56% of Rhön is in free-float.

B. Braun and Asklepios in fact acquired sizeable stakes in Rhön to fend off an all-out sale of the firm to Fresenius last year. That sale had been originally proposed by Münch, who is now seeking to dramatically reduce the size of Rhön. In 2012, Rhön’s sales totalled €2.9bn.

The Rhön spokesman also said that since the proposed sale had positively affected the company’s share price, he couldn’t quite understand the DSW’s complaint. Since the sale was announced in September, Rhön’s stock has put on €3 to trade at around €20 a share. DSW announcement (German)