Activist investor 7Square is pushing German insurer Nuernberger Beteiligungs AG to consider rival takeover offers, saying a potential acquisition by Vienna Insurance Group wouldn’t reflect its full value.
The life-insurance business and the property/casualty operations of Nuernberger have underperformed for years, 7Square wrote in a letter to board members seen by Bloomberg News. VIG announced last week it’s in exclusive due diligence on the potential acquisition of a controlling stake in the German company, without specifying a possible price.
Nuernberger should immediately terminate discussions with VIG and announce a plan to explore all strategic options, according to 7Square. The investor, which holds an unspecified stake in Nuernberger, said the German group could be worth about €119 to €143 per share, or as much as €1.6 billion ($1.9 billion). Shares of Nuernberger fell 0.7% in Frankfurt trading Tuesday to €60.80, giving it a market value of €700 million.
“We have concrete knowledge of the interest of several strategic investors who would be interested in acquiring the life-insurance division or the entire Nuernberger Group as part of a transparent and fair process,” 7Square wrote in the letter.
A representative for Nuernberger didn’t have any immediate comment. A spokesperson for VIG declined to comment.
Nuernberger’s investors include Munich Re, Swiss Re AG and Japan’s T&D Holdings Inc. 7Square is also calling on Nuernberger to lift transfer restrictions on its shares, which effectively require the management board to approve significant stock transactions.
In another case last year, Swiss insurer Baloise AG removed voting-rights restrictions on its shares, which opened the door for activist investor Cevian Capital to have a greater say and eventually led to a sale of the company.
Because Nuernberger shares are listed on the Frankfurt bourse’s lower-tier Scale segment, an acquirer of a majority stake wouldn’t be required to make a mandatory offer for the remaining shares. 7Square said a takeover without making an offer to other investors would permanently reduce the value for all shareholders.
“It is imperative that the examination of strategic alternatives is carried out neutrally, transparently and carefully in the interests of the company, in particular in the interests of all shareholders,” 7Square said. That’s all the more important given the company’s “devastating” operating situation and poor market valuation, according to the investor.
7Square has typically advised hedge funds and activist shareholders on publicly listed German companies, though it also occasionally invests on its own.
Photograph: The old town of the city of Nuremberg, Germany; photo credit: Christian Ender/Getty Images
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