Nieke Roos
31 May 2021

VDL isn’t prepared to let Neways go without a fight after all. With the relaunch of its public offer, it seems to be sowing the seeds for a hostile takeover battle.

VDL Groep hasn’t given up on its ambitions to acquire Neways. Two weeks ago, the Son-based EMS specialist pulled the plug on the discussions, calling the takeover bid an undervaluation that insufficiently serves their company’s interests. VDL looked to have accepted ‘defeat’ but has now relaunched its increased public offer of 13 euros per share, in an attempt to obtain the remaining 30 percent of the shares that haven’t been tendered yet. In a composed response, Neways says that it has taken note through the media and that it will make further announcements when required.

At the end of April, VDL disclosed its plans to make a public offer on all Neways shares. After upping the proposed 12.50 euros per share to 13 euros, the Eindhoven-based industrial conglomerate said it had irrevocable commitments for 68.7 percent of the issued and outstanding capital, including its own 27.63 percent stake. The board of directors and supervisory board of Neways reviewed the proposal and concluded that it didn’t sufficiently reflect the value creation of their company, as a result of which they couldn’t support it. Two minor shareholders, Add Value Fund (5 percent) and Bernard ten Doeschot (3 percent), have also rejected the increased offer.

Neways HQ
Credit: Neways

Fair

All much to the surprise of VDL, which claims the proposal is fair. According to the industrial conglomerate, the offer represents a significant premium of 19.3 percent compared to the closing price of the Neways share on 29 April – the last trading day before the initial announcement – and a significant premium of 38.9 percent over the 3-month volume weighted average price as of that date. The family-owned business also points out that in March, a 5 percent stake was sold for only 9.22 euros a share.

“Increasingly, the success of both VDL and Neways is determined by the collaboration between multidisciplinary teams in the fields of mechanics, electronics and software. Customers are looking for parties of significant size who have all competencies under one roof and can offer them in combination. VDL is determined to make this a reality,” the company states in the press release. “We’ve been examining the possibility of a combination with Neways. From a commercial point of view, this would make sense given the overlap in industries and therefore offers strategic and growth opportunities for Neways.”

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“As a family business, VDL pursues commitment and continuity,” the press release continues. “We prefer investments in sustainable innovation and development for the long term rather than using financial resources to pay short-term dividends. This approach also creates personal growth and development opportunities for Neways employees. These considerations have led to the firm conviction that a combination of VDL and Neways is evidently in the best interests of Neways and all parties involved.”

Further steps

As a last resort, VDL could launch a squeeze-out bid, forcing the minority shareholders to sell. But that would require at least a 95 percent stake, which seems impossible to achieve when Add Value and Ten Doeschot stay firm in their rejection. Alternatively, the conglomerate could fight to replace Neways’ management to get the acquisition approved. VDL hasn’t yet dwelled on possible further steps, emphasizing that it’s looking to maintain a constructive dialogue with Son.