The first time a court has admitted secondary release proceedings following confirmatory resolution
On November 5, 2007, the Frankfurt Higher Regional Court issued a final judgment in release proceedings ruling that action brought by a series of plaintiffs to set aside the resolution of Wella AG’s annual shareholders’ meeting of December 13/14, 2005 regarding the squeeze-out of minority shareholders does not stand in the way of registration of the squeeze-out in the commercial register. The squeeze-out was subsequently entered into the commercial register on November 12, 2007. As a result of squeeze-out registration, all shares of minority shareholders were transferred to majority shareholder Procter & Gamble, thus completing the takeover of Wella AG by Procter & Gamble.
The ruling of the Frankfurt Higher Regional Court marks the first time a court has allowed new (secondary) release proceedings to be initiated after the adoption of a confirmatory resolution (Wella AG had “confirmed” the challenged squeeze-out resolution at a second annual shareholders’ meeting). The decision provides stock corporations with a further effective means of overcoming the blocking of structural measures by way of action for avoidance. Even if the stock corporation is unsuccessful in the initial release proceedings it can initiate new release proceedings once a confirmatory resolution has been adopted without having to wait for final judgment to be issued in the avoidance action.
Procter & Gamble was advised by Dr. Michael Arnold, Dr. Dirk Wasmann, Dr. Gerhard Wirth (all partners, corporate/M&A), Dr. Felix Born (corporate/M&A) and Martin Grabolle (corporate/M&A) from Gleiss Lutz’ Stuttgart office.
A Gleiss Lutz team of lawyers led by Dr. Gerhard Wirth and Dr. Michael Arnold had previously advised Procter & Gamble in connection with its takeover of Wella AG in 2003 and on the conclusion of the domination and profit transfer agreement between Wella AG and Procter & Gamble in 2004. Gleiss Lutz also advised Procter & Gamble in connection with preparing the squeeze-out in 2005.
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