Bolkestein facing flak from Germany on take-overs plan

Date: 27/06/02

By Peter Chapman

GERMANY'S leading business organisation has reacted angrily to leaked details of a new EU take-over law which they say will fail to produce a level playing field and result in Berlin having to dismantle its own new take-overs regime.

Under proposals originally expected to be unveiled next week, but now delayed pending further consultation, Internal Market Commissioner Frits Bolkestein envisages watering down plans to freeze classes of shares with special voting rights.

These allow certain minority investors to control companies, once a bidder has amassed shares representing 75 of the capital.

The 75 'break through' plan was the linchpin of a report by a team of company law experts led by Unilever advisor Jaap Winter.

Bolkestein would also ban company boards using so-called 'poison pills' to ward off hostile bids without the explicit permission of shareholders.

But Peter Wiesner, legal representative for the German confederation of industry, the Bundesverband der Deutschen Industrie (BDI), said firms are 'very disappointed' by the voting rights move.

It is seen as a sell-out to Sweden, where special shares help the powerful Wallenberg family control huge swathes of industry.

Unlike the Bolkestein proposals, the new German law explicitly bans the use of special shares. It also allows boards to block attempted take-overs even before an offer is announced if they get prior permission from shareholders - a practice known as vorratsbeschluss.

'What Bolkestein is doing is allowing member states their barriers and at the same time he is going to forbid the defensive measures that we had to introduce in January,' Wiesner said.

The proposal would mean German companies would never be able to take over Swedish firms, but would be sitting ducks for foreign raiders, he claimed:

'Over there, it is like Fort Knox. There is no chance of making a take-over bid,' he added.

The upshot would be a total failure to deliver the level playing field that MEPs demanded last year when they blocked an earlier proposal.

'Having a level playing field is like being pregnant. You can't be a bit pregnant.

'You either are or you are not,' said Weisner.

German Christian Democrat MEP Klaus-Heiner Lehne, who led opposition to the earlier take-overs proposal, has promised to table amendments to the proposals if his worst fears are confirmed.

Lehne, in Edinburgh this week for a conference with centre-right MEPs, is due to meet Bolkestein in Strasbourg next week to discuss the proposal.

Single Market spokesman Jonathan Todd confirmed that the Commission has put launching the proposal on ice pending further consultations.

Germany's leading business organisation has reacted angrily to leaked details of a new EU take-over law which they say will fail to produce a level playing field and result in Berlin having to dismantle its own new take-overs regime.