Activists fire even in times of crisis

Dhe letters from New York do not have a signature and do not name a personal author. A good two weeks ago, Commerzbank chairman Stefan Schmittmann received two mails from the shareholder and financial investor Cerberus. After all kinds of criticism of the credit institution, the Americans in the second letter threatened to enforce their demands in “alternative ways”. They did not become concrete. They said goodbye “Sincerely, Cerberus Management, L.P.”.

The initiator of the two-time post is reportedly Cerberus’s co-boss Frank Bruno. The head of Germany, David Knower, on the other hand, doesn’t like the whole thing, can be heard in the financial scene. After all, the local governor has been trying for years to smooth Cerberus’ rough reputation – and to present the holding company as a constructive investor who makes a contribution to the common good. Knower travels a lot to Berlin, for example, to maintain the contact network.

In the German-American Chamber of Commerce Amcham Germany he got a seat on the extended board. The two letters that the F.A.Z. show, on the one hand, that the private equity house is pulling the reins and that its activist side is showing more strongly again. Such letters are a classic tool used by activists to increase the pressure on supervisory and executive boards.

Troublemakers are cheerfully on the move

On the other hand, the letters show that, despite the Corona crisis, the hustle and bustle of aggressive investors is not slowing down. Cerberus has had a stake in Commerzbank for years – more than 5 percent of the package became known in 2017 – so it is not a question of new capital now. But the investor looks up publicly in the crisis. He accuses the board of directors of a too high cost base, a failed strategy and inaction. also demands he has two seats on the board. Cerberus emphasizes willingness to engage in dialogue, but if need be, it should be done differently: “Looking ahead, we will devote our energies to alternative ways of delivering the changes that are necessary to reverse Commerzbank’s ongoing failure.”

Cerberus and Commerzbank: This is currently the most prominent known case of an activist investor in Germany: a shareholder who presses management beyond the normal influence of an institutional investor. Activists usually ask for staff to be changed on the board of directors or the supervisory board, to fundamentally change the strategy or to sell divisions. The number of such initiatives – called “campaigns” in industry jargon – has risen sharply in the past decade; the originally Anglo-Saxon phenomenon has established itself in Europe.

The troublemakers are now lively again, which suggests a number of indications. Their activity tends to decrease during a bear market, as Patrik Czornik says, who heads the mergers and acquisitions (M&A) business in Germany for the American investment bank JP Morgan: Declining share prices are “not necessarily the time for activists” he explains. But the market is picking up again, and, according to Czornik, activism is also something “that should probably increase again with M&A business in the second half of the year.”


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