Dechert scoops Wella litigation

Dechert’s one-partner Frankfurt outpost has bagged one of the most important pieces of litigation in Germany – Elliot Associates’ challenge to Procter & Gamble’s E3.2bn (£2.3bn) takeover of Wella.

Gerhard Kaiser, the founding partner of the Frankfurt office, has drafted in lawyers from Brussels, London and the US to give additional advice on the high profile case.
He is also looking to expand Frankfurt with lateral hires.

Dechert has a long-term relationship with Elliot Associates in the US, but had to pitch for the work in Germany. The Frankfurt office has been open since August, but only up and running since December. Initially it focused on M&A, for which Kaiser is best known. The Wella case is its first major piece of litigation.

Kaiser told The Lawyer: “This is the first real test of the new German Takeover Act. The core question will be battle-tested before BaFin [the financial regulator].”

The majority of Wella’s stock is in owned ordinary voting shares held by family shareholders. However, a sizeable chunk of stock is owned by investors including Elliot and Close Brothers. These shares give the investors preferential rights as creditors, but no voting rights.
Under its offer, Procter & Gamble will pay E92.3 (£66.1) per share to the ordinary shareholder who negotiated the deal and just E65 (£46.6) to the preferential, non-voting shareholders.

Aside from the application of the Takeover Act, Kaiser is also looking at whether BaFin’s decision complies with the German consitution and Article 56 of the EC Treaty. He said: “We do not rule out appearing before the consutitional court or the European Court of Justice.”

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.