Dechert vows to appeal against Wella ruling

Gleiss Lutz has won a landmark court case for its client Procter & Gamble (P&G) which confirms the court’s approach to the new German Takeover Act.
The win allows P&G to keep new acquisition Wella for the price it originally offered shareholders.
However, key institutional shareholder Elliot Associates, represented by Dechert, has vowed to appeal the decision before the Federal Constitution Court and launch an action for damages against P&G.
Under its offer for Wella, P&G will pay e0.92 (63p) per share to the Wella family, which owns the company’s ordinary voting shares; but P&G only offered E0.65 (45p) per share to preferential but non-voting shareholders, including Elliot and Close Brothers, which own a sizeable chunk of the stock.
Gerhard Kaiser, founder of Dechert’s Frankfurt office, claimed that the discrepancy was illegal.
The case has major implications for companies such as Volkswagen, Porsche and BMW, where controlling families hold blocks of voting shares, but have used the preference share structure to gain access to German capital markets without losing control of the company.
However, the Frankfurt Appeals Court ruled that the institutional investors had no right to challenge the approval of German regulator BaFin because the Takeover Act does not protect third parties.