Announcement of the Regional Court Munich I of 22 June 2022 (convenience translation):
The 5th Commercial Chamber of the Regional Court Munich I today rejected by decision the applications for the determination of a higher cash compensation than € 38.26 per share on the occasion of the squeeze out at Bayerische Hypo- und Vereinsbank AG (Case No. 5 HK O 16226/08).
On 26/27 June 2007, the general meeting of HypoVereinsbank AG had decided to transfer the shares of the minority shareholders to its majority shareholder UniCredito S.p.A. against a cash compensation of € 36.28 per share (squeeze out). Around 300 applicants had initiated appraisal proceedings against this in order to have the appropriateness of this cash compensation owed by UniCredito as the main shareholder reviewed by the courts.
The chamber under its presiding judge Dr Helmut Krenek, which specialises in questions of company law and thus also in appraisal proceedings, issued a very comprehensive 350-page decision explaining why it considered the cash compensation to be appropriate. In doing so, the chamber had to deal not only with the valuation of Bayerische Hypo- und Vereinsbank AG, but above all with the value of six other banks from Central and Eastern Europe. After HypoVereinsbank had sold its shares in Bank Austria Creditanstalt AG to UniCredito, it also had to be examined whether the purchase price of approximately € 12.5 billion paid to HypoVereinsbank as of 25 October 2006 had been agreed to be too low; if this had been the case, HypoVereinsbank would have been entitled to claim compensation for disadvantages against UniCredito, which de facto controlled it through its majority shareholding. The same reviews had to be carried out by the Board with regard to the sale of International Moscow Bank to Bank Austria Creditanstalt for a purchase price of € 984 m, the sale of HVB Bank Ukraine to a subsidiary of UniCredito for a price of € 83 m, and the sale of registered shares held by HypoVereinsbank to HVB Bank Latvia for approximately € 75 m. HVB Bank Latvia also acquired registered shares from HypoVereinsbank for a purchase price of € 75 m. The latter also acquired from HypoVereinsbank its branches in Vilnius for € 10.67 million and in Tallinn for € 71.582 million. The proceedings also dealt with the contribution of the investment banking business of the UniCredito Group to HypoVereinsbank by way of a capital increase against contribution in kind with a value of € 2.025 billion as well as the appropriateness of the prices for the sale of several asset management subsidiaries of HypoVereinsbank to subsidiaries of UniCredito.
In order to assess the appropriateness of the respective company valuations and purchase prices, the chamber consulted two experts, who provided a total of four expert opinions comprising more than 1,500 pages. In addition, the chamber heard the experts for a total of about 17 hours on two days to explain their expert opinions.
On the basis of this extensive taking of evidence, the chamber came to the conclusion that the valuation of International Moscow Bank was too low by € 208 million and the valuation of two asset management companies was too low by € 182 million and € 49 million respectively, which justified corresponding claims by HypoVereinsbank for compensation for disadvantages. In the case of International Moscow Bank, the planning for this bank was clearly too pessimistic, resulting in a significantly higher enterprise value. Since the valuation of the banks' sales transactions - i.e. also those of International Moscow Bank and HVB Bank Ukraine, which are based in Russia and Ukraine - was based on the reporting date of 25 October 2006, the war in Ukraine could not play a role for the Chamber.
In the case of Bank Austria Creditanstalt, the Board did indeed consider the purchase price to be too low; it determined a value of € 13.666 billion for the share held by HypoVereinsbank. However, since the determination of any company value is directed towards the future and therefore depends on a large number of forecasts to be made on the reference date, there can be no exact, single correct value of a company. In addition, since a contractual agreement had to be assessed here, in which the contracting parties had greater leeway, the board drew the line above which a compensable disadvantage would have had to be assumed, at 10 %, further than in the case of the direct structural measure. In the case of a deviation of 9.18 %, this limit had not been exceeded.
In the case of HypoVereinsbank itself, whose valuation was based on the reporting date of the Annual General Meeting in June 2007, there were changes in the capitalisation rate because HypoVereinsbank's own risk had to be recognised at a lower level than assumed by the valuation experts and the settlement auditors. This has the same effect on the discounting of future earnings as the adjustment of the volume of listed investments not required for operations, which are recognised as a special value because they are not necessary for maintaining HypoVereinsbank's business operations. Taking further account of the claims to compensation for disadvantages, including the interest accruing thereon, as a special value, this resulted in an enterprise value for HypoVereinsbank of € 32.155 billion, which would result in an arithmetical settlement of € 40.07 per share. This compensation would be 4.73 % higher than the compensation determined by the Annual General Meeting. However, with such a deviation of less than 5 % from the set compensation, the board could not yet determine the inappropriateness of the original cash compensation of € 38.26 per share because of the predictive nature of any company valuation.
The decision is not final yet.
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Editor's comment:
Applicants may file an appeal within one month from the date of service of the decision. The Bavarian Supreme Court decides on these appeals in the second (and probably last) instance.
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