SPARK controversy over Sputz offer

The end of one battle marks the start of another for acquisitive venture capital firm NewMedia SPARK. The firm’s intention to acquire a majority stake in Sputz, a German broking and venture capital firm, has become the subject of debate amid Germany’s takeover commission.

According to a statement from the commission published in German newspaper, Handelsblatt, SPARK’s bid is said to have violated its voluntary takeover code because it did not extend an official takeover offer, but only an “invitation” to Sputz’s shareholders to offer their shares to SPARK. According to Germany’s takeover commission, articles 13,14,15 and 16 of the German Takeover Code are not compliant with SPARK’s offer.

SPARK is offering a price of E8.50 per share, but is thought to have offered a higher price for the 26.4 per cent of the company that it hopes to acquire from broker Van der Moolen and the Frhlich family. This would be in breach of article 13 stating that an offer should be made equally to all target shareholders, even if they have already accepted the public offer. SPARK’s aim is to buy sufficient further shares to give it at least 51 per cent of the share capital of Sputz.

At a press conference held on September 3, Sputz’s chief executive Bernhard Freytag voiced his concerns on the deal, advising shareholders not to support the tender offer by SPARK. He added that the price of E8.50 per share significantly undervalues the company and suggested that a more reasonable price would be in the range of E12.50 per share. A spokesperson from the company said management is also in talks with other potential partners with regards to the deal. The spokesperson added that SPARK’s offer has not provided enough information with regards to share price and in particular concerning its ultimate goal in acquiring the company.

According to SPARK, the successful acquisition of a majority stake in Sputz will provide the firm with a quoted vehicle to further expand its existing operations in the German market. In addition, it will enable Spark to maximise the value of Sputz’s operating businesses and investments.

Headquartered in Dusseldorf, with operations in Frankfurt, Sputz is listed on the Frankfurt stock exchange. If SPARK’s offer is accepted, the firm’s intention is to maintain this listing following its acquisition of 51 per cent control.

In Germany, venture capital and broking businesses tend to be much more closely aligned than in the UK. There are extensive synergies between the Sputz business and SPARK’s existing portfolio, which includes investments in on-line financial transaction platforms such as EO and its pending acquisition of GlobalNet Financial. Sputz’s portfolio includes a number of financial businesses operating both on- and off-line. For example, it owns around one per cent of Deutsche Brse and 11 per cent of Tullett & Tokyo Liberty, as well as majority ownership in significant German broking operations. The firm also owns stakes in technology-related, pre-IPO businesses and has been developing its venture capital business to complement its financial services business. It also has fund management operations.