These facts, which are all documented in reports, press releases and other publications issued by the Company, clearly establish a detrimental related-party transaction. Upon instruction by the majority shareholder ADLER Group S.A., the Company transferred a material strategic asset (the stake in ADLER Group S.A.) to Aggregate Holdings S.A. The consideration was set at the stock market price, which did not reflect the intrinsic value of the ADO Shares at the time of the transfer (which was reported as an EPRA-NRV of EUR 75.32 per ADO Share as of 30 June 2020, equivalent to EUR 1.107bn for the entire stake). In fact, the Company itself had paid a premium of more than 120% – taking into account the purchase price and related costs and expenses, including the repayment of the notes – upon acquisition of the ADO Shares in December 2019, i.e. only seven months prior to the transfer to Aggregate Holdings S.A. There is no discernible strategic or business rationale to this transaction, which left the Company with a loss (and outstanding acquisition-related debt) of approx. EUR 765m.
Under German stock corporation law, in the absence of a domination agreement, a dominating shareholder has to compensate a dependent company for any commercial disadvantage caused to a stock corporation through a transaction entered into upon instruction by the majority shareholder until the end of the business year (sec. 317 para. 1 AktG). Despite several announcements, no domination agreement has yet been concluded between ADLER Group S.A. and the Company.
Accordingly, if there is no compensation by year-end 2020, the Company will have a damage claim under sec. 317 para. 1 AktG against the dominating shareholder (ADLER Group S.A.) and its legal representatives as well as a damage claim for breach of fiduciary duties against the Company’s board members which agreed to or participated in the transaction. As laid out above, the amount of such claims is potentially up to EUR 765m. Unless the Company decides to pursue such claims itself, it will be necessary to appoint a special representative to enforce the claims for the Company and thereby protect the legitimate interests of the Company and its minority shareholders.
We note that the Company has announced several times that the majority shareholder intends to conclude a domination agreement or effect a squeeze-out. Until such a measure is completed, however, the Company needs to be run as a fully independent entity. Regarding in particular the current dual role of Mr. Maximilian Rienecker as CEO of the Company and Co-CEO of ADLER Group S.A., the supervisory board of the Company will need to ensure that any upcoming conflicts of interest are resolved in the best interest of the Company.
No further detrimental transactions must be undertaken upon instruction by the majority shareholder, unless there is full compensation. Any future transactions will need to be carefully scrutinized and we reserve all rights to add further claims with respect to other transactions to our proposed resolutions.