Yearand

in

ReviewOutlook

2021Germany

Executive Summary 2020 will be remembered as a tumultuous year for the German and global markets, with the COVID-19 pandemic intensifying an already uncertain economic and geopolitical environment. However, as this report demonstrates, the German business world has shown great resilience in the face of unprecedented headwinds.

At Latham, we partnered with clients to develop creative solutions as they navigated some of the year’s largest and most challenging German deals. We thank our clients for their continued trust and valued role in the Latham community.

This report evaluates key developments in the German market in 2020, while also exploring anticipated legal and business trends in the year ahead. Our analysis provides insight into the state of M&A and private equity, with a focus on evolving deal strategies such as spin-offs, carve-outs, and distressed divestments. We take a close look at some of the most active sectors in the German and international markets, including life sciences and technology. Our lawyers also address pertinent topics in litigation, such as collective redress and US white collar enforcement. By covering a range of topics, we hope to provide you greater clarity in a fast-changing and challenging business environment.

We appreciate the opportunity to serve and support you, and look forward to our continued work together.

Sincerely, Burc Hesse | Tobias Larisch

Tier 1 Rankings

#1 Europe M&A by Volume Bloomberg

Europe PE by Value Bloomberg#1

Germany

EMEA Corporate High Yield Bonds (inc EM) Legal Adviser – Combined Issuer and Manager by Deal Count and Volume#1

Europe

#1 JUVE (8x)

LEGAL 500 (9x)#1

ContentsClick on the icons below to jump to that section

Strong 2021 Deal Pipeline For German M&A and Private Equity Market

The German M&A/PE market was off to a good start in 2020, but then the COVID-19 pandemic hit, unsettling the market and leaving many market participants to wonder whether we were going to face a situation comparable to the financial crisis in 2007, when there was a shutdown in the capital markets and M&A dropped precipitously.

When business went largely virtual in 2020, so did M&A activities. While there was a significant slowdown in the second and third quarters in M&A/PE activities, no drop-off happened comparable to the one in 2007. According to Refinitiv’s Global Mergers & Acquisitions Report, in terms of deal value, there has even been an increase in announced M&A transactions with German involvement of 18% compared to 2019 (while the number of transactions was indeed lower than in 2019 due to the slowdown in the second and third quarters). The German M&A/PE market has hence proved to be resilient despite the challenges resulting from the pandemic, and private equity’s share in German M&A deals even increased compared to 2019.

In terms of deal volume, three transactions involving German market participants stood out in 2020.

Deal Highlights

CPPIB

Advising CPPIB on a co-investment with KKR in the P2P of Axel SpringerDr. Nikolaos Paschos, Mike Bond, Sebastian Goslar, Dr. Jana K. Dammann de Chapto

Triton

Advising Triton on the acquisition of the Renk Group and high yield bond financing Dr. Rainer Traugott, Dr. Rüdiger Malaun, Dr. Alexander Lentz

Siemens Healthineers

Advising Siemens Healthineers on acquisition of Varian, capital increase for acquisition financing and in securing CFIUS clearanceCharles Ruck, Dr. Rainer Traugott, Joshua Dubofsky, Dr. Oliver Seiler, Les Carnegie, Rachel Alpert

Ardian

Advising Ardian and other sellers on the sale of Competence Call Center Group (CCC) to TELUS International, deal value: € 915 million Burc Hesse, Dr. Sebastian Pauls, Stefan Süß, Dr. Max Hauser, Prof. Dr. Thomas Grützner

CONTINUE READING>

How will StaRUG help German companies address the impact of COVID-19?

Looking back at the last few months, the COVID-19 pandemic has hit many companies hard and amplified disruptive trends in various sectors. In addition to other measures to address COVID-19 impact on businesses, Germany has made significant progress toward international best practices for restructuring: StaRUG — known as the German scheme — came into effect on 1 January 2021, as one of the most modern restructuring laws in the world. But how will StaRUG help German companies survive the crisis and what if insolvency is unavoidable?

What does the German market currently look like?

Frank Grell: When we look back at the last few months, the COVID-19 pandemic has created a truly unprecedented set of challenges for the economy and society at large. Despite the drastic policy responses in financial aid, the crisis has hit many companies hard. For example, in the automotive and engineering industries, the COVID-19 crisis has exacerbated the already tense situation that arose from the diesel crisis and the government’s lack of a coherent and sustainable mobility strategy.

Nils Röver: COVID-19 has also amplified disruptive trends in other sectors. The fashion and retail industry, for example, faced changes in consumer behavior before the pandemic. The number of restructurings in these industries has risen throughout the year. However, we are far from seeing the wave of restructurings and insolvencies some commentators expected. The temporary suspension of the obligation to file for insolvency until January 2021, coupled with financial aid, has helped fashion and retail companies stay afloat.

Leoni AG

Advising Leoni AG on reorganization of its dept exposures and within the scope of its ongoing restructuring Dr. Jörn Kowalewski, Alexandra Hagelüken, Adam Goldberg

TUI Group

Advising a consortium of banks on the provision of a credit line of €1.8bn (April 2020) and on the additional provision of a credit line of €1.2bn (August 2020) for TUI Group by German state-owned development bank KfWAlexandra Hagelüken, Sibylle Münch, Frank Grell

Tom Tailor GmbH

Advising bank consortium on federal and state guaranteed loan financing for Tom Tailor GmbHFrank Grell, Sibylle Münch

Benteler Group

Advising the steering committee of the credit financiers of the Benteler Group on the now completed full refinancing, which is part of a fundamental restructuring of Benteler GroupDr. Jörn Kowalewski, Dr. Hendrik Hauke

CONTINUE READING>

Deal Highlights

Energy and Infrastructure in Germany Sustains Momentum Despite Challenges

The energy and infrastructure sectors continue to experience transformative changes at a high pace, a trend that Latham expects to sustain momentum for the foreseeable future.

Energy Sector

The global mega-trend of decarbonization had repercussions in Germany in 2020, most prominently displayed by the “Coal Exit”. In July 2020, the German federal government passed legislation to end coal-fired power generation in Germany by 2038, and a decommissioning schedule for individual lignite power plants was agreed. For utilities, the legislation entailed challenging negotiations with the German federal government to reach agreement on the terms of this phase-out (previously covered in this Latham post). The Coal Exit will likely continue to accelerate the energy transition, with an ever-increasing share of renewables in the overall energy mix.

In 2020, hydrogen became the energy buzzword given its potentially key role in the global push to produce carbon-free energy. A wholesale shift to clean hydrogen could remove carbon from the electricity system, which is currently responsible for around a quarter of the world’s annual 33 gigatonnes of carbon dioxide emissions. A hydrogen shift could also help clean up transport and heavy industry, which account for the bulk of other global emissions. However, the opportunities around hydrogen would also require coordinated policy, lower hydrogen production costs, and massive growth of renewable energy source.

EQT Infrastructure and OMERS

Advising EQT Infrastructure and OMERS on the acquisition of Deutsche Glasfaser from KKR Infrastructure and ReggeborghDr. Rainer Traugott, Dr. Nils Röver

Siemens AG

Advising a bank consortium on the planned listing of Siemens AG’s energy division on the regulated market (Prime Standard) of the Frankfurt Stock ExchangeDr. Oliver Seiler, Dr. Rainer Traugott

Allianz Capital Partners

Advising Allianz Capital Partners in its joint venture with TelefónicaBurc Hesse, Dr. Sebastian Pauls, Dr. Tobias Larisch, Michael Esser, Conrad Andersen, Stefan Süß

BayWa AG

Advising BayWa AG on the capital increase at the level of its subsidiary BayWa r.e. renewa-ble energy GmbHDr. Rainer Traugott, Dr. Stephan Hufnagel, Dr. Tobias Larisch, Dr. Nils Röver

CONTINUE READING>

Deal Highlights

Healthcare and Life Sciences Trends to Watch in 2021

The healthcare and life sciences (HCLS) sector remained particularly active throughout 2020. Despite the COVID-19 pandemic, deal activity was very strong in the first half of the year — with notable transactions including Asklepios’ US$1.3 billion takeover of listed Rhön Klinikum AG. The second half of the year saw continued deal activity in HCLS, including Siemens Healthineers US$16.4 billion acquisition of Varian and the sale of German-Spanish pharmaceutical producer Neuraxpharm.

International players have shown increasing interest in HCLS — including, in particular, major private equity investors. This trend, which was evident before the outbreak of COVID-19, has only accelerated during the pandemic, due to the disproportionately large impact the virus has had on certain other sectors of the economy (e.g. Logistics, Real Estate, Automotive, Hotels/Traveling). Major hospital and nursing home operators, telehealth, online pharmacies, lab diagnostics, and similar services are likely to see continued increased investor focus also in 2021. Acquirers will also place increasing importance on scalable internet-driven business models.

Rhön Klinikum

Advising Rhön Klinikum AG on € 1.3 bn take-over by AsklepiosDr. Henning Schneider, Dr. Andreas Lönner

Berenberg Bank

Advising Berenberg Bank as Sole Global Coordinator and Sole Bookrunner on the IPO of PharmaSGP Holding SE

Cheplapharm

Advising Cheplapharm on the acquisition of a product portfolio from LEO Pharma and a portfolio from Takeda as well as on high yield bond issues (January 2020 and November 2020)Christoph Engeler, Dr. Tobias Klass, Dr. Susan Kempe-Müller, Dr. Rüdiger Malaun, Dr. Alexander Lentz

EQT VIII

Advising EQT VIII funds on financing arrangements to enter into exclusive negotiations for the acquisition of Schülke & Mayr GmbHDominic Newcomb, Thomas Weitkamp

CONTINUE READING>

Novo Holdings A/S (Copenhagen)

Advising Novo Holdings A/S (Copenhagen) on the increase of its anchor stake in Evotec AG, acquired in February 2017Dr. Henning Schneider, Dr. Dirk Kocher, Dr. Jana Dammann de Chapto

Deal Highlights

German Tech Sector Increasingly Attractive for M&A and PE Investment

With virtual connectivity on the rise, the tech industry has seen an increase in dual- and tri-track M&A processes, as well as in private equity investments.

2020 was a year in which technology facilitated rapid changes in how people work and live. Despite fewer M&A megadeals and a lower volume overall, tech stood out as an increasingly active and competitive sector that is poised to see further growth in investment activity, particularly as companies look to upgrade their capabilities and offerings by harnessing technology. Several notable M&A transactional trends emerged in 2020, including a rise in dual-track and even tri-track processes. Growth equity also rose significantly as Europe’s startup scene further matured. Amid these developments, key IP and privacy questions have arisen for businesses in the digital sector to consider, including those surrounding artificial intelligence (AI).

Ardian

Advising Ardian on the acquisition of a majority stake in Swissbit Holding AG and Ardian/Swissbit on the subsequent acquisition of the Hyperstone GroupBurc Hesse, Dr. Sebastian Pauls

Hg

Advising Hg on the acquisition of a majority stake in F24Oliver Felsenstein

Alcentra Limited and Deutsche Bank AG

Advising Alcentra Limited and Deutsche Bank AG on the financing of the acquisition of con-gatec Holding AG by DBAG Fund VIIIThomas Weitkamp, Alexandra Hagelüken, Dr. Christian Jahn

CONTINUE READING>

TeamViewer

Advising TeamViewer on the acquisition of XaleonDr. Nikolaos Paschos, Christina Mann

Allgeier SE

Advising Allgeier SE on the spin-off of 100 percent of the global technology consulting and software development business bundled in the Nagarro Group and the related listing of Na-garro SE (“Spin-off”)Dr. Oliver Seiler, Dr. Nikolaos Paschos

Deal Highlights

Collective Redress Set to Redefine Litigation Across Europe

Recent developments in the area of collective redress will redefine the litigation landscape in Germany and throughout Europe.

Mass actions have been on the rise throughout Europe for some time. In 2020, the balance clearly tipped towards a more plaintiff-friendly environment. Most importantly, the EU passed a new directive on representative actions that will implement an EU-wide collective redress regime.

Traditional mass actions have spiked, too, and a particular area of focus for many companies should be GDPR-related claims, a segment of the market that saw a number of troublesome judgments in 2020. Finally, legal tech companies and litigation funding received a big boost from the German Federal Court of Justice (FCJ), and now the German lawmakers is getting involved.

EU-Wide Collective Redress Regime

CONTINUE READING>

The EU has adopted a new collective redress regime that will redefine the litigation landscape in Germany and throughout Europe. Here is what to expect.

Are Changes in Store for US White Collar Enforcement?

Recent developments include updated DOJ compliance guidance, a continued rise in FCPA proceedings and penalties, and new investigatory approaches in light of the pandemic.

2020 saw many important developments in US white collar enforcement, driven by Administration priorities, business trends and practices, and the realities of COVID-19. The legal and business communities paid particular attention to the US Department of Justice’s (DOJ’s) updated guidance on “Evaluation of Corporate Compliance Programs,” the growing number of contentious Foreign Corrupt Practices Act (FCPA) proceedings (matched by significant penalties), and the impact of the COVID-19 pandemic on investigative strategies by regulators and corporate compliance programs. Now, with the United States transitioning to a new administration, it is yet to be seen whether these trends will continue and what other changes may be in store.

DOJ’s Updated Guidance on Evaluation of Corporate Compliance Programs

The DOJ issued a number of updates to its guidance in recent years, providing companies and the defense bar with additional transparency into the US government’s priorities and expectations. In 2020, the DOJ and US Securities and Exchange Commission (SEC) issued an updated FCPA Resource Guide (which largely codified well-established policy, case law, and enforcement updates); and in June 2020 the DOJ issued updated guidance for prosecutors evaluating corporate compliance programs. The updated guidance includes the following key enhancements and clarifications.

CONTINUE READING>

ContactsDr. Christoph Baus Partner | Litigation

Dr. Jana K. Dammann de Chapto Counsel | Antitrust

Christoph Engeler Partner | Corporate/M&A

Alice Fisher Partner | White Collar

Frank Grell Partner | Restructuring

Prof. Dr. Thomas Grützner Partner | White Collar

Burc Hesse Partner | Private Equity

Dr. Susan Kempe-Müller Partner | Corporate/IP

Latham & Watkins operates worldwide as a limited liability partnership organized under the laws of the State of Delaware (USA) with affiliated limited liability partnerships conducting the practice in France, Hong Kong, Italy, Singapore, and the United Kingdom and as an affiliated partnership conducting the practice in Japan. Latham & Watkins operates in South Korea as a Foreign Legal Consultant Office. Latham & Watkins works in cooperation with the Law Office of Salman M. Al-Sudairi in the Kingdom of Saudi Arabia. © Copyright 2021 Latham & Watkins. All Rights Reserved.

Dr. Tobias Larisch Partner | Corporate/M&A

Dr. Nikolaos Paschos Partner | Corporate/M&A

Stefan Patzer Counsel | Litigation

Dr. Nils Röver Partner | Private Euqity

Dr. Henning Schneider Partner | Corporate/M&A

Pia Sösemann Associate | Corporate/IP

Tim Wybitul Partner | Data Privacy