Author: Brian Sanchez

A man works at the plant of Shimge Pump Industry Group Co Ltd in Wenling, Zhejiang province. [Photo/China Daily]

More Chinese companies are using mergers and acquisitions of German ventures to grow their markets in Europe, while the German groups for their part are attracted by the prospect of making moves into the booming Chinese market.

As one of the groups seeking to expand its overseas business through the takeover route, Shimge, the Zhejiang-based listed company, bought two foreign pump firms－Wita Wilhelm Taake GmbH in Germany and Hel-Wita Sp. z o.o. in Poland in September for 13.5 million euros ($14.7 million), and is sniffing around for takeover targets in the US.

“It’s quite difficult for us to expand business in foreign markets, especially in Europe, where there is a concentration of major and mature industrial leaders. We acquired those local companies for their advanced technology, experienced staff members and existing market,” said Zhang Yongqing, the strategic advisor of Shimge Pump Industry Group Co Ltd.

Meanwhile, Goodbaby Group, China’s biggest manufacturer and retailer of baby-care products, has already gone down a similar road with its international M& A strategy.

In 2014, the company, based in Suzhou, Jiangsu province, made its first acquisition of Cybex GmbH. The takeover of the German brand of premium car seats meant a wider exposure in Europe and its entry to the high-end car-seat marketplace.

“We are keen to offer high-quality and updated products, with cutting-edge design and technology for consumers, by acquiring advanced and creative brands to speed up the innovation,” said Liu Tongyou, the company’s vice-president and chief financial officer at the German-China Forum for Investment and M&A 2016 in Kunshan, Jiangsu province.

In the same year Goodbaby Group bought US group Evenflo Co Inc. The large manufacturer of infant consumer products, including car seats and feeding bottles, was acquired for $143 million and represented a move forward in the US mid-class market.

Currently about 70 percent of Goodbaby’s business has been switched to international markets including Japan, North America and Europe, while the remaining 30 percent is from China.

Lifted by the central government’s strategy, more Chinese companies have stayed with their strategy of investing and purchasing overseas companies. Statistics from the Ministry of Commerce show that Chinese companies completed a total of 521 acquisitions worth $67.4 billion this year in 67 countries and regions covering 18 industries. The amount has already surpassed last year’s total of $54.4 billion.

In particular, M&A deals done by Chinese companies in Germany keep surging. A total of 37 acquisitions of German companies were completed in the first half of this year, against the total amount for 2015 of 39. One of the highlights was the Midea’s 4.5 billion euro purchase of industrial robot maker Kuka.

“More Chinese companies are willing to purchase small and medium-sized German family businesses for their experience and technology while German companies also need investments to pull them out of the economic slowdown,” said Zhang Ning, senior associate of CMS, a global law firm covering services in 34 countries.

However, there are failed examples. Statistics from consultancy PwC show that over 50 percent of overseas acquisitions failed. The report from the Ministry of Commerce also found out that only 13 percent of the overseas projects were making profits.

“It is essential for companies to carry out a detailed examination of the firms into their background, financial condition and tax issues with the support from experienced law firms to avoid purchasing a failing project,” said Zhang, who every week meets dozens of Chinese clients wanting to acquire German companies.

Mumbai: Cyrus Mistry, the ousted chairman of Tata Sons Ltd, formally talked about defining the relationships between Tata group trusts and operating company boards at a June meeting of the holding company’s nomination and remuneration committee, said two people close to Mistry.

Mistry’s team had prepared a governance report on issues related to the group structure, the two said, declining to be identified because of the sensitive nature of the issue. Mistry was removed before he had an opportunity to present these issues at the 24 October board meeting of Tata Sons. 

Tata trusts have all the rights through representation on the holding company’s board to ensure that the flow of dividends for them is steady and that the company is not taking undue risks. However, the governance document sought to clarify the role of each entity and ensure that the promoters exercised their rights through their nominee directors, the two said. 

The root cause of the current conflict in the Tata group is the group’s operating structure itself, proxy advisory firm Institutional Investors Advisory Services said in a 12 November note. Tata trusts exert control over Tata Sons, which exerts control over operating companies, several of which are publicly traded and subject to scrutiny by external stakeholders including shareholders, the note said.

ALSO READ | Cyrus Mistry rebuts Tata’s takeover bid claim

The governance document, the two people cited above said, is important in view of the events that culminated in the boardroom coup. On 24 October, the board of Tata Sons (with the exception of Ishaat Hussain and Darius Khambatta) voted to remove Mistry as chairman. 

The new directors who were appointed on 25 August could not have had enough information to judge Mistry’s performance, especially since their orientation programme was scheduled only on 2 November and 15 November, the people cited above said.

On 8 August, the chairman of Tata trusts, Ratan Tata, sent a letter to the board of Tata Sons nominating Venu Srinivasan and Ajay Piramal as additional directors “in his personal capacity”. This bypassed the Tata Sons board’s nomination and remuneration committee, and while it is within the law, it constitutes bad governance, these persons said. In the 25 August shareholder meeting, Tata Sons, with two-thirds ownership, confirmed the appointment of Piramal and Srinivasan. Because Tata trusts have the powers to nominate one-third of the board, Amit Chandra was appointed as a director the next day.

ALSO READ | Will do whatever it takes to deal with Cyrus Mistry ouster: Tata Sons

“We have said whatever we had to say in the 10 November statement,” said a Tata group spokesperson. Srinivasan did not respond to an email sent to him on 12 November; Chandra and Piramal declined to comment. 

These directors met only once for a 15 September board meeting before voting to oust Mistry in the next meeting, the people close to Mistry said.

The decision to sack Mistry was not an uninformed one, said two people close to the newly appointed directors. At least one director had multiple meetings with various stakeholders, including Mistry, said one of the two people close to the directors, adding that the director was well-briefed and had enough information. 

The second person said that the directors were provided adequate background material on Tata Sons, including minutes of earlier board meetings, detailed presentations and other important documents. This person also added that the new members “participated robustly” in discussing the strategy plan on 15 September. The directors were not satisfied with the new plan, this person said. 

Though Mint couldn’t ascertain the agenda of the board meeting, another person with direct knowledge said that besides routine affairs, it included the presentation of a five-year strategy plan by Mistry. 

While one cannot question the capability of the independent directors, “the issue is, did they actually understand the issue or were they coaxed”, said J.N. Gupta, managing director and co-founder at Stakeholders Empowerment Services.

“After all, how long does it take someone of the director’s stature to get a grip of what’s happening,” said the first person close to the directors cited above.

NEW YORK, NY / ACCESSWIRE / November 11, 2016 / Pomerantz LLP announces that a class action lawsuit has been filed against Tyson Foods, Inc. (“Tyson” or the “Company”) (NYSE: TSN) and certain of its officers. The class action, filed in United States District Court, Southern District of New York, and docketed under 16-cv-08108, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired Tyson securities between November 23, 2015 and October 6, 2016 inclusive (the “Class Period”). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934 (the “Exchange Act”).

If you are a shareholder who purchased Tyson securities during the Class Period, you have until December 16, 2016 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at rswilloughby@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll free, ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased.

[Click here to join this class action]

Tyson, together with its subsidiaries, operates as a food company worldwide. Through its Chicken segment, Tyson raises and processes chickens into fresh, frozen, and value-added chicken products. The Company sells its products through its sales staff to grocery retailers, grocery wholesalers, meat distributors, warehouse club stores, military commissaries, industrial food processing companies, chain restaurants or their distributors, live markets, international export companies, and domestic distributors, as well as through independent brokers and trading companies.

The Complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Tyson systematically colluded with several of its industry peers to fix prices in the broiler-chicken market; (ii) the foregoing conduct constituted a violation of federal antitrust laws; (iii) consequently, Tyson’s Chicken segment revenues during the class period were the result of illegal conduct; and (iv) as a result of the foregoing, Tyson’s public statements were materially false and misleading at all relevant times.

On September 2, 2016, the market had its first inkling of Defendants’ fraud, when food distributor Maplevale Farms, Inc. (“Maplevale”) filed an antitrust class action complaint in U.S. District Court for the Northern District of Illinois against Tyson and several other poultry producers, including Pilgrim’s Pride Corporation, Perdue Farms, Inc., and Sanderson Farms, Inc., alleging that Tyson and the other companies named in the complaint had conspired since 2008 to manipulate the prices of broiler chickens?chickens raised specifically for meat production?by coordinating and limiting production and exchanging detailed information about prices, capacity, and sales volume, in violation of the Sherman Antitrust Act, 15 U.S.C. §§ 1-7 (the “Sherman Act”).

Between September 7, 2016 and October 7, 2016, eight more class action complaints were filed against Tyson and other poultry companies in the Northern District of Illinois, on behalf of individual consumers and indirect purchasers of broiler chickens, all alleging that Tyson had engaged in the price-manipulation scheme described in Maplevale’s complaint.

On October 7, 2016, Pivotal Research (“Pivotal”) downgraded Tyson from “Hold” to “Sell.” Explaining the downgrade, analyst Timothy Ramey directed investors’ attention to the allegations of price manipulation by Tyson and its industry peers and described the Maplevale complaint as “powerfully convincing.”

On news of the downgrade, Tyson’s share price fell $6.63, or 8.91%, to close at $67.75 on October 7, 2016. From the filing of the Maplevale action on September 2, 2016 to Pivotal’s downgrade on October 7, 2016, Tyson’s share price fell $8.69, or 11.37%.

The Pomerantz Firm, with offices in New York, Chicago, Florida, and Los Angeles, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com

SOURCE: Pomerantz LLP