SUMIDA: Company News

Conclusion of Domination Agreement with VOGT electronic AG

January 23rd 2009
Press Release

SUMIDA CORPORATION (“SUMIDA”) hereby announces that it has through its wholly-owned German subsidiary Sumida VOGT GmbH (“SVG”) entered into a Domination Agreement with VOGT electronic AG (“VOGT”), a listed German entity in which SUMIDA holds a majority stake. SUMIDA has at the same time initiated the process to delist VOGT from the Frankfurt and Munich Stock Exchanges. These two initiatives will allow SUMIDA to act more flexibly and effectively in Europe and allow VOGT to be more effectively integrated within SUMIDA. This is especially necessary in view of the current challenging economic situation.

  1. Background
    SUMIDA currently holds 84.6% of VOGT shares through SVG and another subsidiary, Ismart Global Limited. Although SUMIDA is the majority shareholder of VOGT, the rights of minority shareholders under German law places restrictions on the decisions that SUMIDA can take with respect to VOGT. Entering into a Domination Agreement (*) allows SUMIDA to remove these restrictions. This is an important component of SUMIDA’s ongoing efforts to position itself to meet the challenges of the current economic situation.

    (*) Domination Agreement:
    A Domination Agreement is an agreement regulated by Germany law which will allow the parent company (“controlling company”) to control its subsidiary (“controlled company”), when it doesn’t hold 100% shares of the subsidiary. In return, the controlling company is obliged to compensate the minority shareholders of the controlled company by means of an annual compensation, or alternatively purchase their shares. These payments are to be made at levels appraised by auditors appointed by the controlling company and independent auditors appointed by the relevant German commercial court. The Domination Agreement has to be approved at the shareholders’ meeting of both controlling and controlled companies.

    SUMIDA, as the majority shareholder of VOGT, has also decided to initiate the process for the delisting of VOGT from the Frankfurt and Munich Stock Exchanges. There is no advantage for VOGT or SUMIDA to continue to be listed. Delisting would allow VOGT to avoid the high compliance costs and high level of resources that is currently needed to maintain the listing. Given the small float and the very low trading volumes, SUMIDA believes that there is a strong probability that both stock exchanges will approve the application from VOGT.

    After the implementation of the Domination Agreement and the approval of the delisting, SUMIDA
    1. expects to achieve greater flexibility and effectiveness in its European operations;
    2. will have the flexibility to organize and modify its group structure without having to take into consideration the current restrictions in Germany.
  2. Schedule and Effects on Financial Results
    1. Schedule
      March 19, 2009 - Extraordinary Shareholders Meeting of VOGT
      Approval Items:
      1. the conclusion of a Domination Agreement between VOGT and SVG
      2. delisting from the Frankfurt and Munich Stock Exchanges
      SUMIDA and VOGT are working towards completing the delisting from both Exchanges by the end of this year.
    2. Effects on Financial Results
      Should all minority shareholders choose to sell their shares to SUMIDA, the estimated amount to be paid is approximately 800 million yen. This will not affect our FY2009 consolidated P/L. As the number of remaining minority shareholders is expected to be low, we estimate that the annual compensation to be paid from FY2010 onwards based on the domination agreement will be small and there will be no significant impact on the closing of consolidated financial results. We will inform you once the details are available after the implementation of the Domination Agreement.

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