COMMERZBANK AG 
The investment companies of the cooperative banks and savings banks, Union Investment and Deka, have announced that they will vote against the necessary resolutions at the extraordinary general meeting of the American-German gas group on January 18. "We will vote against the delisting. Linde ruled out this step when it took over Praxair," Ingo Speich, Head of Corporate Governance at Deka Investment, told the Reuters news agency on Monday. Linde is nevertheless likely to secure the necessary approval quotas. The influential shareholder advisor ISS - a subsidiary of Deutsche Börse for two years - recommends that its clients vote in favor of the proposal.
With the withdrawal of Linde, Deutsche Börse would lose by far its largest DAX stock. Institutional Shareholder Services (ISS) considers the Linde Executive Board's arguments for concentrating on the New York Stock Exchange to be "convincing", according to the resolution paper presented to Reuters. In particular, the fact that Linde shares have come under renewed selling pressure with every recalculation of the leading Dax index has recently weighed on the share price. Many of the US investors who dominate Linde's shareholder base are guided by the ISS vote.
Linde had justified its withdrawal plans by citing the additional work involved in accounting and valuation issues. The plan had triggered a debate about the competitiveness of the German financial center in international comparison. A single stock in the Dax may not account for more than ten percent of the index at the chaining date. Because Linde shares outperformed most other DAX stocks, the index weighting was capped at each recalculation. Index funds (ETFs) therefore had to sell some of the shares again.
"TAKEOVER THROUGH THE BACK DOOR"
ISS explained that shareholders' rights were practically unaffected by the planned restructuring. Linde plc, based in Dublin, is to be merged into a new holding company, which will only be listed in New York from the beginning of March. This would also remove Linde from the Dax. Rheinmetall or Commerzbank could then move into the leading index - if they are in the black for the past year by then.
However, Deka manager Speich and Union Investment fund manager Arne Rautenberg see this as a disadvantage for German shareholders: "We are critical of Linde's delisting from the Frankfurt Stock Exchange and its disappearance from the Dax and all European indices, as it would be accompanied by a significant reduction in the volume of the German stock market," said Rautenberg. Managers of Dax index funds will then have to sell the securities. "This makes it clear that ultimately Praxair took over Linde and not the other way around. It was a takeover through the back door," criticized Speich. Munich-based Linde AG merged with its US competitor Praxair in a "merger of equals" in 2018.
(Report by Alexander Hübner; Contribution: Hakan Ersen; Edited by Olaf Brenner; If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)
