M&A and Private Equity

by Dr. Nikolaos Paschos, Dr. Susan Kempe-Müller, Pia Sösemann

With virtual connectivity on the rise, the tech industry has seen an increase in dual- and tri-track M&A processes, as well as in private equity investments.

2020 was a year in which technology facilitated rapid changes in how people work and live. Despite fewer M&A megadeals and a lower volume overall, tech stood out as an increasingly active and competitive sector that is poised to see further growth in investment activity, particularly as companies look to upgrade their capabilities and offerings by harnessing technology. Several notable M&A transactional trends emerged in 2020, including a rise in dual-track and even tri-track processes. Growth equity also rose significantly as Europe’s startup scene further matured. Amid these developments, key IP and privacy questions have arisen for businesses in the digital sector to consider, including those surrounding artificial intelligence (AI).

by Dr. Henning Schneider, Christoph Engeler

The healthcare and life sciences (HCLS) sector remained particularly active throughout 2020. Despite the COVID-19 pandemic, deal activity was very strong in the first half of the year — with notable transactions including Asklepios’ US$1.3 billion takeover of listed Rhön Klinikum AG. The second half of the year saw continued deal activity in HCLS, including Siemens Healthineers US$16.4 billion acquisition of Varian and the sale of German-Spanish pharmaceutical producer Neuraxpharm.

International players have shown increasing interest in HCLS — including, in particular, major private equity investors. This trend, which was evident before the outbreak of COVID-19, has only accelerated during the pandemic, due to the disproportionately large impact the virus has had on certain other sectors of the economy (e.g. Logistics, Real Estate, Automotive, Hotels/Traveling). Major hospital and nursing home operators, telehealth, online pharmacies, lab diagnostics, and similar services are likely to see continued increased investor focus also in 2021. Acquirers will also place increasing importance on scalable internet-driven business models.

*Note: data as of 25th January, 2021 | Source: Bloomberg, Latham & Watkins Tactical Opportunities Analysis

By Dr. Tobias Larisch and Dr. Jana Dammann de Chapto

The energy and infrastructure sectors continue to experience transformative changes at a high pace, a trend that Latham expects to sustain momentum for the foreseeable future.

Energy Sector

The global mega-trend of decarbonization had repercussions in Germany in 2020, most prominently displayed by the “Coal Exit”. In July 2020, the German federal government passed legislation to end coal-fired power generation in Germany by 2038, and a decommissioning schedule for individual lignite power plants was agreed. For utilities, the legislation entailed challenging negotiations with the German federal government to reach agreement on the terms of this phase-out (previously covered in this Latham post). The Coal Exit will likely continue to accelerate the energy transition, with an ever-increasing share of renewables in the overall energy mix.

In 2020, hydrogen became the energy buzzword given its potentially key role in the global push to produce carbon-free energy. A wholesale shift to clean hydrogen could remove carbon from the electricity system, which is currently responsible for around a quarter of the world’s annual 33 gigatonnes of carbon dioxide emissions. A hydrogen shift could also help clean up transport and heavy industry, which account for the bulk of other global emissions. However, the opportunities around hydrogen would also require coordinated policy, lower hydrogen production costs, and massive growth of renewable energy source.

by Frank Grell and Dr. Nils Röver

Looking back at the last few months, the COVID-19 pandemic has hit many companies hard and amplified disruptive trends in various sectors. In addition to other measures to address COVID-19 impact on businesses, Germany has made significant progress toward international best practices for restructuring: StaRUG — known as the German scheme — came into effect on 1 January 2021, as one of the most modern restructuring laws in the world. But how will StaRUG help German companies survive the crisis and what if insolvency is unavoidable?

von Burc Hesse, Dr. Tobias Larisch

The German M&A/PE market was off to a good start in 2020, but then the COVID-19 pandemic hit, unsettling the market and leaving many market participants to wonder whether we were going to face a situation comparable to the financial crisis in 2007, when there was a shutdown in the capital markets and M&A dropped precipitously.

When business went largely virtual in 2020, so did M&A activities. While there was a significant slowdown in the second and third quarters in M&A/PE activities, no drop-off happened comparable to the one in 2007. According to Refinitiv’s Global Mergers & Acquisitions Report, in terms of deal value, there has even been an increase in announced M&A transactions with German involvement of 18% compared to 2019 (while the number of transactions was indeed lower than in 2019 due to the slowdown in the second and third quarters). The German M&A/PE market has hence proved to be resilient despite the challenges resulting from the pandemic, and private equity’s share in German M&A deals even increased compared to 2019.

von Dr. Tobias Larisch

COVID-19 hat in den vergangenen Wochen zu großer Unsicherheit auf dem M&A Markt geführt und der Frage, wann Transaktionen wieder im großen Umfang stattfinden werden. Die Akteure sind indes nicht untätig, sondern bereiten sich auf das Wiederaufleben des Transaktionsgeschehens vor. Private Equity Investoren nehmen hierbei vermehrt auch börsennotierte Gesellschaften als Transaktionsziele in den Blick.

Die COVID-19 Krise führt auch zu Veränderungen und Trends im Akquisitionsfinanzierungsmarkt und wirft viele Fragen auf: Welche neuen Möglichkeiten der Akquisitionsfinanzierung werden wir zukünftig häufiger sehen? Gibt es bei den Banken für Übernahmekredite eine neue Zurückhaltung, die einen weiteren Aufschwung für das Direct Lending bedeutet?

Welche Entwicklungen wir im Markt sehen erklärt Finanzierungs-Partner Thomas Weitkamp im Interview.

By Jana K. Dammann de Chapto, Niklas Brüggemann, Jan Vollkammer

Changes will extend the scope of filing requirements in the healthcare sector and clarify factors for review of foreign investment in German companies.

Key Points:

  • Acquisitions of at least 10% of German companies that develop, manufacture, or produce vaccines, drugs, protective equipment, and other medical goods for the treatment of highly infectious diseases will be required to be reported to the BMWi.
  • The new rules clarify factors to be considered when analyzing whether a foreign investor may threaten German national interests.
  • The new rules will likely enter into effect as soon as mid-May.

von Dr. Nikolaos Paschos, Sebastian Goslar, Dr. Dirk Kocher, Dr. Andreas Lönner

Eine „Formulierungshilfe“ der Bundesregierung enthält u.a. Regelungen zur Ermöglichung von Hauptversammlungen trotz Veranstaltungsverboten.

Key Points:

  • Ein von der Bundesregierung erarbeiteter Gesetzentwurf sieht u.a. vor, dass ordentliche Hauptversammlungen von AG und KGaA in der Saison 2020 nicht innerhalb der ersten acht Monate, wohl aber innerhalb des Geschäftsjahres 2020 stattfinden müssen. Für die Europäische AG verbleibt es – mangels Regelungskompetenz des nationalen Gesetzgebers – hingegen bei der Regelfrist von sechs Monaten.
  • Unter bestimmten Voraussetzungen können diese Hauptversammlungen ausnahmsweise ohne physische Präsenz von Aktionären und Bevollmächtigten als rein virtuelle Veranstaltung abgehalten werden.
  • Alternativ kann der Vorstand mit Zustimmung des Aufsichtsrats auch ohne entsprechende Satzungsermächtigung die sog. Briefwahl oder Online-Teilnahme ermöglichen.
  • Die Einberufungsfrist kann auf 21 Tage verkürzt werden. In diesem Fall verschiebt sich bei Gesellschaften mit Inhaberaktien der sog. Record Date auf den Beginn des zwölften Tages vor der Hauptversammlung.
  • Abschlagszahlungen auf den Bilanzgewinn sind auch ohne entsprechende Satzungsermächtigung aber weiter nur unter den sonstigen Voraussetzungen zulässig.

Die Bundesregierung hat eine umfassende Formulierungshilfe in Gestalt des Entwurfs eines „Gesetzes zur Abmilderung der Folgen der Covid-19-Pandemie im Zivil-, Insolvenz- und Strafverfahrensrecht“ erarbeitet. Dieser Entwurf sieht in Art. 2 § 1 verschiedene Regelungen vor, um die Durchführung von Hauptversammlungen trotz bestehender Veranstaltungsverbote zu ermöglichen. Diese orientieren sich inhaltlich weitgehend eng an den Forderungen, die das Deutsche Aktieninstitut in einer Stellungnahme vom 19. März 2020 erhoben hatte. Eine Beschlussfassung des Bundestags könnte bereits am 25. März 2020 erfolgen.