Aixtron, Share buyback unavoidable in the event of a takeover

Aixtron has fallen victim to short sellers again. This time, the allegations relate to insider trading in Zusammenhang with the planned capital increase. Is it all just noise?

Protected from takeover

No, because the new shares will not be subject to a lock-up period. So it would be theoretically possible for a major shareholder to increase its stake beyond the threshold of 30 percent. This would require the submission of a takeover bid. Should this happen, the company's management would be obliged to initiate a share buyback program in order to protect the remaining shareholders.

Share buyback as a protective measure

A protective measure that can be very expensive. After all, Aixtron has almost 29.5 million shares outstanding. At a price of currently around 27 euros per share, a takeover would cost around 800 million euros. Aixtron has cash and cash equivalents of around 277 million euros. Thus, the company could not finance a protective measure of this magnitude from its own resources. External financing would be necessary.

This would not only be expensive but would also take time. And that's exactly what hostile bidders are counting on. They hope that the company's management will not be able to react quickly enough to mount an effective defense against a takeover.

No protection from a creeping takeover

In addition, the planned share capital increase also makes the company more vulnerable to a creeping takeover. After all, it would then be much easier for an interested party to acquire a blocking minority, i.e., a stake of more than 25 percent. This would give the hostile bidder de facto control over the company.

So it is quite possible that the planned capital increase will ultimately make Aixtron even more attractive to potential acquirers. Whether a takeover is ultimately in the interest of the shareholders remains to be seen.

Conclusion

In summary, it is quite possible that the planned share capital increase will make Aixtron more vulnerable to a takeover. So it is not surprising that the stock price has come under pressure again. It remains to be seen whether the company's management will be able to convince investors of the necessity of the capital increase and thus avert a takeover.