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Berkshire - Gen Re - Kölnische Rück


MartinWhitman
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  • 11 months later...

Berkshire now owns 100% of Kölnische Rück through Gen Re. Former minority shareholders will receive 165,xx EUR in cash now and probably some money in the future as the court decides that Warrens offer was way too low ;)

 

http://www.genre.com/pressrel/PressProfile/0,,site=gcr-en&ref=pressrel131-en,00.html

 

 

Martin,  I was checking some of your older posts, and I noticed this.  We owned Kolnische Ruck for a few brief months before Warren's take out.  I had no idea that shareholders might receive more than the take out price.  Any further word on this?  At the time I thought his price was most generous.  Is this typical in German courts?!

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In Germany, if you are squeezed out (majority shareholder can file for a squeeze out when owning 95%+ of the shares), minority shareholders can demand a valuation appraisal in court ("Spruchstellenverfahren"). This process can take quite a long time. However, if you voluntarily sold your stock on the stock exchange, you are not eligible. You had to wait till your shares were effectively taken from your account to get the opportunity for a higher payout. This happened in feb 2009.

 

There are studies that courts statistically increase the squeeze out price by roughly 25% and in the Cologne Re situation I am personally hoping for more. I mean, Warren Buffett is not famous for paying full value and I hope the court will recognize it.  ;D

 

Unfortunately I do not have any insight in the court proceedings regarding the appraisal.

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Martin,

 

Our records show that the squeeze out price accepted by a majority (LOL) of shareholders in 2007 was 148.90 Euros; we sold on the market near that time 161.49 Euros.  In February 2009 the shareholders who didn’t sell received 165 Euros.  Is this correct according to your post?  Was the higher price in February, 2009 a reflection of accumulated interest, or what? 

 

Am I correct in my understanding that the hold-out shareholders are likely to receive even more on average perhaps 25% more than the February, 2009 price?  If so, great for them, BUMMER for us.  (Actually, why should I complain about a one bagger for a year and a half hold?)    :)

 

By the way, we bought Kolnische Ruck in 2005 as a result of a lead that was posted.  Were you the poster?  If so, many thanks.  :)

 

TWA

 

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148,90 EUR was the squeeze out offer price by Berkshire for the minority shares. In Germany, the AGM has to vote on the squeeze as they did with more than 95% of Berkshires votes in favor of the squeeze out. However, dissenting shareholders can go to court and file a motion against the AGM vote. This of course extends the whole squeeze out so that oftentimes there are court settlements: The majority shareholder increases the price while the dissenting minority shareholders withdraw their claim. This is why the squeeze out actually took that long (intention announced in april 2007, actually taking place in feb 2009) and thats why the price increased to 165,57 EUR.

 

The outcome of the appraisal is very unsure, it depends on the expert opinion and his "fair" valuation of Cologne Re as well as the judge. But on average, squeeze outs resulted to an increase of 25% in german courts. It can be anything from zero to unlimited.

 

This is all very complicated and there are specialised "investors" in Germany who are doing nothing but squeeze out situations. The beauty of this approach is of course that there is virtually no downside and you get your money back while waiting for the appraisal decision.

 

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148,90 EUR was the squeeze out offer price by Berkshire for the minority shares. In Germany, the AGM has to vote on the squeeze as they did with more than 95% of Berkshires votes in favor of the squeeze out. However, dissenting shareholders can go to court and file a motion against the AGM vote. This of course extends the whole squeeze out so that oftentimes there are court settlements: The majority shareholder increases the price while the dissenting minority shareholders withdraw their claim. This is why the squeeze out actually took that long (intention announced in april 2007, actually taking place in feb 2009) and thats why the price increased to 165,57 EUR.

 

The outcome of the appraisal is very unsure, it depends on the expert opinion and his "fair" valuation of Cologne Re as well as the judge. But on average, squeeze outs resulted to an increase of 25% in german courts. It can be anything from zero to unlimited.

 

 

This is all very complicated and there are specialised "investors" in Germany who are doing nothing but squeeze out situations. The beauty of this approach is of course that there is virtually no downside and you get your money back while waiting for the appraisal decision.

 

 

 

Being one of these "investors" sounds like good work if you can get it.  Even WEB is not beneath such easy labor.  A few years ago, he bought Lazer Mortgage after their plan of reorganization was announced.  His total investment: $1 million, equivalent to an investment of $5.00 by a mere mortal.  His upside: about 10% over 6 months on a sure thing.  He also got a free lottery ticket on a yet to be settled lawsuit that could have added significantly to his return.  I think WEB gets as much satisfaction from "sure thing" investments as the rest of us get from big scores. :)

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