VIENNA/ZURICH (Reuters) - Sensor maker AMS (AMS.S) could launch a planned 1.65 billion euro ($1.8 billion) rights issue as early as this month to help to fund its takeover of German lighting group Osram (OSRn.DE), the Austrian company said on Tuesday.
The capital increase was approved by AMS shareholders last month and the company is pressing ahead as quickly as possible in expectation that it will be able to close the Osram deal by the middle of the year to form a European leader in sensors and lighting.
“We expect to be ready with everything needed in the process by end of February, beginning of March,” said finance chief Michael Wachsler-Markowitsch when asked about the rights issue schedule.
The measure will increase AMS’s 4 billion euro market capitalisation by more than 40%.
AMS plans then convene an extraordinary meeting of Osram’s shareholders in August to secure their approval of a so-called domination agreement with Osram shortly after the expected closing of the takeover in the second quarter.
“The reason we are so confident about the timing is that we don’t expect any regulatory issues,” said AMS Chief Executive Alexander Everke.
“We have almost no overlap in businesses in any country, so it should be a very straightforward process.”
The domination agreement would give AMS, which secured nearly 60% of Osram shares in December, full say over Osram’s finances and cash flow.
AMS needs 75% of shareholders present at the EGM to approve the domination agreement and would have to offer the remaining minority investors two alternatives: either paying them an annual guaranteed dividend or a cash settlement.
That could prove expensive because hedge funds still hold 10-15% of Osram, according to AMS.
Those funds have boosted Osram’s share price to more than 47 euros, speculating on a higher price than the 41 euros per share AMS agreed to pay under its offer.
AMS, which has a direct Osram stake of nearly 20%, is considering buying an additional 1-2% of Osram shares in the market to strengthen its position, said Wachsler-Markowitsch.
“Since we have the ability to buy in the market if we want to, we can also increase our shareholding to a level where we expect to get the 75% of the votes (we need) at the upcoming Osram EGM,” the AMS finance chief said.
($1 = 0.9166 euros)
Reporting by Kirsti Knolle and John Revill; Editing by David Goodman