Sulzer Chairman, Leonardo Vannotti, said: “It is clear why InCentive needs Sulzer. It is far from clear why Sulzer shareholders need InCentive.”
Response to InCentive AGM proposals
InCentive still has not withdrawn its proposal to take control of the Board of Sulzer at the AGM, and thereby also of Sulzer Medica, without any payment, over one month before shareholders decide the outcome of its bid and months before shareholders would receive payment for their shares, if the bid were successful. Sulzer’s Board has already recommended that Sulzer shareholders should reject InCentive’s proposals at the AGM on April 19.
Leonardo Vannotti, Chairman of Sulzer, said:
“You don’t ask for the keys to the castle before you’ve paid for it, and in this case the castle isn’t for sale – certainly not at a price way below its value.”
“InCentive continues to push for Board control at the AGM – is this because it knows it is not offering enough to obtain control through its bid?”
Response to InCentive Bid
. The cash offer is in effect CHF 390 per share, not CHF 410, since InCentive intends to deduct from its price Sulzer’s CHF 20 per share dividend for 2000 proposed to be paid to all shareholders on April 26. If Incentive were to become a majority shareholder of Sulzer, it would also benefit indirectly, through its Sulzer shares, from the CHF 6 per share dividend proposed to be paid by Sulzer Medica to Sulzer, but InCentive has not offered to adjust its price upwards for this.
. The Board has previously rejected the price as too low. The price does not reflect the quality of Sulzer’s businesses, their growth potential, the cash to be raised from sales of property and non-core businesses or the value of Hexis.
. InCentive’s bid cannot close prior to May 22 at the earliest and shareholders have until then to decide. They should, in any event, not decide about InCentive’s bid until they consider Sulzer’s formal response, which will be published and sent to shareholders before InCentive’s offer period starts on April 17.
. InCentive’s share alternative is unattractive and risky. The shares are and may remain illiquid and combine a mixture of investments including volatile technology, biotech and Indian shares.
Fred Kindle, Chief Executive of Sulzer, said:
“InCentive’s offer does not begin to recognise the value and potential of Sulzer’s core businesses, the cash to be realised from property sales and disposals of non-core businesses or the value potential of Hexis.”
Leonardo Vannotti said:
“We are confident that our shareholders will view the CHF 390 cash offer as unacceptable and that the bid will therefore fail. Shareholders should however ensure that InCentive does not get in by the back door. We therefore urge shareholders to vote against InCentive’s AGM proposals that seek control of the Sulzer Board. “
Questions InCentive Should Answer:
Performance
. In the past InCentive has not disclosed sufficient information on its portfolio to permit investors to analyse in detail its sectoral performance.
Who benefits from InCentive?
. InCentive Capital has granted InCentive Asset Management a lucrative long-term management contract for its assets for an indefinite period, termination of which is subject to a significant penalty.
. Given the fact that Mr Braginsky is a member of the Board at both these companies and actually owns InCentive Asset Management, is there a conflict of interest between InCentive Capital and InCentive Asset Management?
. InCentive Capital elected to opt out of the mandatory bid rules of the Swiss Federal Stock Exchange Laws, which protect minority shareholders. As a result, a shareholder could acquire control of InCentive without making an offer to buy out minority shareholders in the event of a takeover.
Transparency
. InCentive holds 5.4% of Sulzer and not the 14% to 15% it claims. It has undertaken a complex series of transactions involving derivatives, the exact details of which have not been made transparent. Why doesn’t InCentive fully disclose the terms of its derivatives transactions and current position?
AGM proposals: What incentive for shareholders?
. Shouldn’t InCentive control Sulzer’s Board only if its bid is successful? Why should shareholders give InCentive control well before shareholders have decided the outcome of its bid?
. If InCentive were to win control of Sulzer at the AGM, it would obtain control of Sulzer Medica until such time as a spin-off occurs. Why should InCentive control Sulzer Medica without even consulting Sulzer Medica shareholders and without making a bid?
. Why should a 5% shareholder nominate purely its own people to control the Board? Do the interests of 95% of shareholders matter to InCentive? |