Osram Takeover Battle Set for Next Round After AMS Bid Setback

(Bloomberg) -- The battle for control of Osram Licht AG is set to enter a new round after Austria’s AMS AG vowed to keep fighting after a sweetened 4 billion euro ($4.4 billion) offer failed.

AMS, a supplier to Apple Inc., will seek a regulator nod to raise its 19.99% stake in Osram. As the biggest shareholder in the German lighting maker, AMS’s approval has become key for any would-be rival bidder. Osram has said private equity investors Bain Capital and Advent International are inspecting its books with a plan to make an offer.

“We doubt private equity will launch a superior bid given AMS has built up a 19.99% stake in the meantime,” Commerzbank said in a note. “While we cannot rule out that AMS might make another push, timing is yet unclear, so we attach a greater likelihood to a potential cooperation only.”

German takeover law doesn’t allow a new bid within one year unless the target gives its consent, as well as stipulating that an offer needs to be made if an investor crosses a 30% ownership threshold. AMS’s pursuit took a setback Friday, when it announced its offer failed to attract enough support from shareholders. Osram investors had tendered only 51.6% of their shares, short of a 62.5% threshold.

Osram fell as much as 4.5% to 39 euros, the most in two months, while shares of AMS declined as much as 5.8%.

AMS’s failed bid extends a period of protracted uncertainty for Osram, which emerged as a takeover target last year after warning trade friction and a cooling of the car industry had clouded the outlook for 2019. The former division of Siemens AG gets about half of its revenue from the automotive sector. Subsequent profit warnings further eroded investor confidence, sending shares tumbling until the takeover battle took hold.

Osram confirmed talks with Bain and Carlyle, which was later replaced by Advent, in February after they were first reported by Bloomberg News. A bidding war broke out in July when AMS lobbed a higher offer. The Austrian company has drawn criticism from Osram unions and employee representatives on the board, as well as management due to concerns about promised synergies as well as the deal’s financing.

Following the months-long takeover battle against private equity suitors, AMS said the combination remains compelling and pledged to continue to “explore strategic options” for a takeover. Bain and Advent are inspecting Osram’s books “with a view to submitting an offer,” Osram said in a separate statement.

AMS, a supplier of facial recognition technology for Apple’s iPhone, has said it would invest in the company’s Regensburg, Germany site that makes high-tech chip components, but would sell the digital division that makes lighting controls, stage and theater lights.

Century-old Osram, based in Munich, started out making light bulbs, pivoting in recent years under Chief Executive Officer Olaf Berlien to products like iris scanners and infrared emitters. The refocus was contentious, leading to a boardroom clash over strategy and a public spat with Siemens before the German engineering giant sold down its stake.

To contact the reporter on this story: Oliver Sachgau in Munich at osachgau@bloomberg.net

To contact the editors responsible for this story: Tara Patel at tpatel2@bloomberg.net, Elisabeth Behrmann, Jennifer Ryan

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