On Friday, the Extraordinary General Meeting will decide on the demerger of the dialysis group from the parent Fresenius.
(Photo: imago images/Alexander Pohl)
Frankfurt On Friday of this week, the shareholders of the MDax group Fresenius Medical Care (FMC) are to vote at an extraordinary general meeting on the demerger from the parent company Fresenius. The legal form of the dialysis subsidiary previously controlled as a partnership limited by Fresenius shares is to be converted into a normal stock corporation.
The company is to have a supervisory board with equal representation, with Fresenius boss Michael Sen as chairman. Because the major shareholder Fresenius has a right of appointment for two of the six representatives of the capital side with a 32.2 percent share. In addition to CEO Sen, CFO Sara Hennicken is also to join the board.
Analysts and industry observers are not expecting any major surprises at the extraordinary general meeting. Fresenius’ approval with a 32.2 percent stake is certain. In addition, the two major voting rights advisors Glass Lewis and Institutional Shareholder Services (ISS) recommended that FMC shareholders approve all agenda items, as the Handelsblatt learned when asked.
According to insiders, Fresenius also assumes that the necessary majorities will be achieved: A qualified majority of 75 percent of the represented share capital is required for the change of legal form, while a simple majority is sufficient for the election of the members of the Supervisory Board.
For the Fresenius Group, the demerger is a historic step: 27 years after FMC was founded as a subsidiary, it is separated from the parent company again. Fresenius had bought the much larger US dialysis provider National Medical Care in 1996, merged it with its dialysis activities and listed it as FMC to finance the purchase. FMC’s KGaA structure has existed since 2006.
Project Gordian
CEO Michael Sen, who has been in office since October last year, had advanced the plans for simplifying the group structure and unbundling FMC and also obtained the approval of the Fresenius-controlling foundation. The project was christened “Gordian”: a Gordian knot had to be cut.
The dialysis subsidiary FMC, which is fully consolidated by the parent company, had recently brought Fresenius several profit warnings. The complex corporate structure of the Fresenius Group with a double KGaA structure was not popular with investors anyway and increasingly restricted the highly indebted company’s room for maneuver.
Fresenius Medical Care is to become more agile and flexible in the new structure and under the leadership of CEO Helen Giza.
(Photo: IMAGO/sepp spiegl)
The demerger should be completed by the end of the year – if things go well, maybe as early as the third quarter. The Fresenius Group, which most recently had sales of EUR 40.8 billion and a consolidated profit of EUR 1.37 billion, will become two companies in the future. FMC, which recently had sales of around 19 billion euros, is somewhat smaller in terms of sales than the new Fresenius, which based on the figures for the 2022 financial year has sales of around 22 billion euros. The stake in FMC, which Fresenius intends to continue to hold for the time being, will in future be accounted for proportionately in Fresenius’ annual results using the so-called at-equity method.
In the future, Fresenius will focus on the two core business areas Kabi (drugs and clinical nutrition) and the hospital group Helios. The smallest division, Vamed, in which, among other things, the rehabilitation clinics and the service business for clinics are bundled, will continue to be held as a financial investment and is likely to be sold in the future. So far no buyer has been found. The division is now to be restructured.
New Chief Financial Officer
In the new structure and under the leadership of CEO Helen Giza and the new CFO Martin Fischer, Fresenius Medical Care is to become more agile and flexible in terms of investments, financing strategy and dividend policy. Fischer, who comes from Sen’s old network at Siemens and Siemens Healthineers, will start on October 1st.
With the new business model, which focuses on services on the one hand and products on the other, Giza wants to create the framework for more profitable growth at FMC with efficiency measures. This year, the company expects revenue growth in the low to mid single-digit percentage range. The operating result of last 1.5 billion euros should remain stable in the best case, but can also decrease by a high single-digit percentage, according to the forecast.
The Dieter Schenk era, born in 1952, will come to an end on the company’s Supervisory Board. The former executor of Fresenius owner Else Kröner and board member of the Else-Kröner Fresenius Foundation, which controls the Fresenius healthcare group, has been a member of the FMC supervisory board since 1996 and has been its chairman since 2018. In recent years, this has repeatedly caused dissatisfaction among investors from a compliance point of view: they saw Schenk’s independence as a supervisory board member as endangered because of his long affiliation and also his function in the foundation.
The former Merck CFO Marcus Kuhnert (born 1968) and the American Shervin J. Korangy (1974), head of the ophthalmology group BVI Medical, are new to the Supervisory Board on the shareholder representative side. Reappointed from the previous group of members: the American Gregory Sorensen (1962), CEO of the AI diagnostics specialist Deep Health, and the French Pascale Witz (1967), head and co-owner of the consulting firm PWH Advisors. The employee side also sends six representatives.
More: Get out of debt: How Fresenius can become sustainable again