Munich The most valuable Dax group currently linden tree financial center withdrawals Germany return. In an extraordinary general meeting on Wednesday, shareholders of the world’s largest industrial gases group voted with a majority of at least 93 percent in favor of the alleged delisting in Frankfurt, according to preliminary results. This means that the group will also be left out of the leading German index.

Linde aims to delist from the Frankfurt Stock Exchange on March 1. The stock will only trade on Wall Street going forward. German funds that own shares wanted to vote against the withdrawal because they feared a weakening of Germany as a financial center.

With the merger completed in 2018 of linden tree with US competitor Praxair, both parties had claimed that the new group would have a dual listing on the USA and plan in Germany. However, the stock price performed so wellthat the funds that map the Dax had to sell shares over and over again. Because there is a ten percent limit to the weight of a single security in the leading index. These sales then, in turn, depressed the price.

However, there was resistance among the German fund companies. “The delisting is a disappointment,” said Ingo Speich, Head of Sustainability and Corporate Governance at Deka Investment. The decision shows that Linde was ultimately taken over by Praxair. “It was a back door acquisition.” Some of Deka’s clients can no longer invest in Linde shares.

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Union Investment rejects the withdrawal

Union Investment also voted against delisting. From a management point of view, the move seems “at least understandable,” said fund manager Arne Rautenberg. However, one views the step critically, as it leads to a “significant reduction in the volume of the German stock market.” The fund company has invested around 2.5 billion euros in Linde shares.

Linde currently has a market capitalization of around 150 billion euros. and is therefore clearly available SAP Y siemens. The problem with the maximum limit was somewhat lessened with the expansion of the Dax to 40 members, but Linde hit the limits again.

Double listing has worked well, but it has held back price developments, Linde boss Sanjiv Lamba said in late October. Most of Linde’s share trading has already taken place on Wall Street in recent years. Since the merger, the company’s official registered office is in Ireland and its tax address is Woking, near London.

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A 75 percent majority was required for the decision. The AGM was held in Danbury, Connecticut, USA. Linde is largely managed from the former Praxair headquarters. Unlike in Germany, such shareholders’ meetings in the US only last for a very short time. According to information from the group, on Wednesday 78 percent of the outstanding share capital was represented.

For the German stock exchanges, the decision means a step back. “It is a great shame for the financial center that Linde plans to drop the Frankfurt price list,” said Christine Bortenlänger, director of the Deutsches Aktieninstitut. Above all, the decision “in favor of New York” shows that the capital market in Germany is not yet competitive.

Critics view the merger as a secret takeover by the Americans.

To a certain extent, both critics and supporters of the merger, which was highly discussed at the time, can now be confirmed. The sharp rise in Linde’s share price in recent years shows that industrial logic has been confirmed so far. In the industrial gases industry, dominated by a few suppliers, size is an important value. In this way, Lamba and his predecessor Steve Angel were able to continue improving their margins. and set profit targets.

On the other hand, the Metal GI and the workers’ representatives criticized the merger promoted by the former chairman of the supervisory board, Wolfgang Reitzle not a merger of equals, but an acquisition in disguise by the americans

Promises that the company would continue to be listed in Germany were not kept, criticized union representative Daniele Frijia of the Metal GI. Parts of the leadership in the US no longer see Linde as part of the old “Deutschland AG”.

A pure “shareholder value” orientation harbors the risk that “the interests of the workforce will not receive enough long-term attention.” However, the union does not measure business management on the stock market, but on how it treats employees. And it is good that a significant part of the operational management is based in Germany.

Pullach Location Secured, Funding Cap Discussion

In this way, says Frijia, it has been possible to drastically reduce job cuts in Germany. At the moment, there are no redundancies at Pullach, and an internal company wants to better absorb excess capacity in the group in the future.

And it was possible to keep the Pullach site as the headquarters of the engineering division. Therefore, the construction of the plant will continue to be carried out from Germany. However, according to experts, the weighting has shifted towards the US in recent years.

So there is a lot of discussion in Germany about Linde’s farewell. and above the maximum limit, which activated it with . This is “a purely German problem,” said fund manager Rautenberg. In his opinion, the problem would be solved if the legislator gave funds the freedom to weight individual values ​​with more than 10 percent. Only then does it make sense to weight individual stocks higher in the index.

More: Stocks, real estate, private equity – this is how asset managers invest now.

First post: 01/17/2023, 03:49 am.

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