Controverse opinions and arguments
By Virginia F. Bodmer-Altura
We have reported already on the quasi “unfriendly” takeover of Uster® Technologies by the Japanese shareholder Toyota Engineering and we have voiced also some doubts regarding the truth behind the logic. Now there are new developments to report.
In today’s newspaper of Switzerland there is a preliminary detailed offer by Toyota to the remaining shareholders of Uster Technologies published. Some of the details prove on that context that the board of directors as well as the management of USTER® must have been aware of the intent of Toyota for quite some time. There are some details to be read between the lines of this public offering to the remaining shareholders. A definite prospectus for the Toyota offer to public shareholders will be issued on December 19, 2011.
But some of these details of this preliminary offer are stunning. Firstly, for Swiss customs It is very unusual that such a preliminary offer is made. However it corresponds with the Japanese equal rules and that is exactly what Toyota is exercising. Secondly it is unusual that Toyota Engineering does not sign with this company but is using the Toyota logo to insinuate the minds of public individual shareholders that the big Automotive Company (still owning a minority stake at the Engineering Company) and this car maker is performing rather well in Switzerland, is behind the takeover, which is in parts definitely not the case. Thirdly it is very unusual that Toyota Engineering is not showing an advisor in this matter, such as a bank or financial institutions. The public offering is just named “Toyota”, it is mentioned that this preliminary offer is corresponding with the Swiss codex of public offering and also as an issuer of the message it reads only “Toyota” without specific designation of the company behind the offering which in my eyes – knowing Swiss customaries – is not in conformity with these Swiss rules and it might mislead some individual investors and they could claim that they were deceived.
But also the Uster® board of directors and the management did not put their cards on the table, because they don’t mention that the stockholding of Uster® – and logically also the stakes held by the management are not subject to this offering by Toyota therefore in my opinion their interests are not protected in this takeover battle! Covered are however all financial derivatives on Uster® shares, exempted are however all Uster® shares being held by Uster® company or its subsidiaries. This is an important difference as to the communications of the company’s board and management.
Toyota has already protected itself regarding possible defensive actions by the Uster® board or management such as a reduction of price by paying out a dividend or payout in other form, an increase of capital with issue of shares below the offering price of CHF 38 or repayment of capital, sale of own shares below the mentioned offering price. Also other defensive actions are excluded such as sourcing out, emitting, allocation or striking by means of financial instruments such as options and restricted stock units in as far as not evidenced in the annual report of 2010. This at least leaves the shadow of doubt on the announced defensive actions of the Uster® board and the management actions for the only benefit of the company but allows the conclusion that those parties have an eminent interest to protect their own interests. This is legally possible but then the statement in the interest of the company and the advise to public shareholders not to react on the public offering of Toyota is at least doubtful.
Toyota states also that the offered price of CHF 38 per each share corresponds with the contracted price with Alcide because normally a defined bundle of shares enjoys an important discount! And this deal has to meet also the approval of competition authorities in Brazil and Pakistan and other similar bodies.
Further Toyota stipulates a right to extend the offering delay several times over 40 days if Uster® is not drawing forth the publication of the financial results 2010 before the already fixed date of February 28, 2012 including a report by the board of directors. After a time of grace of 10 days the offering period will be valid from January 5th to February 29th, 2012 16.00 hours European mean time to accept by the public shareholder. If this deadline cannot be met another extension of 10 days might be granted. After this date the Uster® shares will be eliminated from the Swiss Stock exchange under the condition that Toyota has received a minimum of 66.67 % of all traded shares of Uster®.
When the competition authorities have given their accord on the transaction in favour of Toyota or have established an attest to free the transaction by any restrictions, all possible time of grace will be void. The wording and evaluations of expertise by counsellors hired by Toyota or Uster® and/or its subsidiaries will have an effect on the transaction, mainly a reduction of the yearly consolidated turnover in the value of CHF 6.6 million (5% of the consolidated proceeds of Uster®) or more at the end of 2010 and/or a decrease of the yearly consolidated operational result EBITDA in the value of CHF 3.7 million (10% of the consolidate EBITDA of Uster® of the end of 2010) or more as well a a reduction of the consolidated own capital of a value of CHF 22.5 million (10% of Uster’s own capital as of end of December 2020) or more. Uster’s board has committed itself to register the shares already acquired or will acquire in the shareholders book with voting rights. Exactly these clauses reveal that the ongoing takeover battle was known to Uster leaders for quite some time before becoming public!
Said all of this it leads to the conclusion that the aim for takeover by Toyota has been planned a long time ago and is now culminating over some differing positions between the board and the management of Uster® and Toyota. In the light of customers and shareholders it has to be also stated that the sudden termination of the collaboration (sensors) between Rieter and Uster® might have its roots in the Toyota intensions to swallow Uster®. Neutral observers were also surprised by the nearness of Uster® with Oerlikon Textile with its Pre-ITMA and ITMA presentations, however it was stated that this fact results for the benefit of the time schedule of journalists!
Even if Toyota claims to have already binding agreements to own 50.34 % of Uster® the last word in this matter is not yet spoken. It will be most interesting to see the arguments of Uster® and its advisor Credit Suisse and finally to see also the public reaction and the rulings of competition authorities. We keep you certainly posted!