The entry of his investment company at Fresenius awakens price fantasies among investors.
(Photo: Reuters)
Frankfurt The activist investor Elliott has joined the health care group Fresenius. The Handelsblatt learned this from people familiar with the process. On the stock exchange, Fresenius shares rose by more than seven percent to EUR 22.14 after the news broke and led the list of winners in the Dax.
Elliott Investment Management’s stake in Fresenius is still below the reporting threshold of three percent, but according to information from the Handelsblatt it is more than one percent. Elliot is the investment management company of Paul Singer, who has already stirred up global corporations such as Bayer and Glaxo-Smithkline with his participation. Neither Fresenius nor Elliot wanted to comment on the subject when asked.
At the health care group Fresenius there are points of attack because the company has not made much progress in recent years and recently had to collect the profit forecasts several times. The stock price has lost more than half of its value in five years.
As a result, long-time CEO Stephan Sturm had to resign from his post early. The former Siemens and Eon manager Michael Sen has been running the company since the beginning of October. At the same time, the former Philips manager Carla Kriwet took over the helm as the new boss at the dialysis subsidiary Fresenius Medical Care (FMC).
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FMC contributes approximately half of Fresenius’ business and is controlled through the structure of a partnership limited by Fresenius shares. However, Fresenius only holds 27 percent of the shares in FMC.
Are FMC and Fresenius going their separate ways?
According to financial circles, this constellation is likely to become one of Elliott’s points of attack. Singer could change the company structure. It is conceivable that FMC shares held by Fresenius will be transferred to the Fresenius shareholders or that the FMC stake will be sold. In the past, various investors had repeatedly called for FMC to split off from Fresenius. The hope of a separation should get new fuel with the entry of Elliott.
>> Also read: Why the new Fresenius boss raises hopes on the stock exchange
Fresenius can only make limited investments in new growth because the company is heavily indebted. Against this background, the former Fresenius boss Sturm also offered the prospect of taking on investors, for example in the clinic subsidiary Helios, if larger acquisitions had to be financed.
According to Handelsblatt information, Sen stopped such plans for the time being in order to get an idea of the situation for himself. “No one can be satisfied with the development of our company over the past ten years. This is also reflected in the development of our share price,” Sen said in a video message to employees when he took office. It is necessary to hit the reset button and take matters into your own hands. “Fundamental changes are required to make Fresenius fit for the coming decades,” Sen continued in his speech.
The Bloomberg news agency first reported on Elliott’s entry.
More: “Mr. Sen can’t do magic” – What investors expect from the new management at Fresenius and FMC