MUNICH, Germany The likelihood that private equity investor Apollo Global Management LLC could take a minority share at still loss-making chip maker Infineon are vanishing, reveals Financial Time Deutschland (FTD).
Ironically, the potential failure of Infineon and Apollo's investment plans is caused by Infineon's recent remarkable success at the stock exchange and in the capital raise the company currently is going through. Apollo planned to buy 29.9 percent of the shares by means of a capital increase. The capital hike in turn is accomplished by a share issue. These shares are offered to existing shareholders in the first place. Only if they refuse to buy them, Apollo will get its turn.
According to the agreement, Apollo would guarantee to buy up to 29.9 percent of the shares. For the case that it will not succeed to get more than 15 percent, the investor reserves the right to cancel the deal.
"It is almost impossible that Apollo will obtain these 15 percent," FTD quotes an anonymous banker involved in the matter.
In the Apollo case, Infineon is about to fall victim to its own success: One reason for the old shareholders' reluctance to selling their options for the new shares is that the share price over the past weeks has constantly been well above the price at which the old shareholders can acquire the new shares. This is rather unusual typically, the share price declines after a company announces a capital increase. And under such circumstances, it is a good deal for the old shareholders if they buy the shares themselves instead of selling it away.
According to FTD, only 26 percent of the options have been actually traded by Wednesday (July 29). In order to acquire 15 percent of Infineon's shares, Apollo needs to buy some 50 percent of the options, reckons FTD.The subscription period will end Thursday (July 30). For Apollo, there is still a theoretical chance to succeed if the share price falls significantly by coming Monday. A rather theoretical chance, but in the case the deal will fail, Infineon will console Appollo by paying a small compensation: 21 million (about $29.5 million).
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