German Pump Maker Raises Ante on Pfeiffer With Chairman Attack

(Bloomberg) -- German pump maker Busch SE increased pressure on rival Pfeiffer Vacuum Technology AG to enter takeover talks by alleging the chairman’s opposition to the unsolicited approach may be swayed by a conflict of interest.

In a private letter dated April 15, seen by Bloomberg News, Busch accused Pfeiffer Chairman Michael Oltmanns of being “inadequate and untenable” in his current position. Busch Managing Partner Sami Busch said Oltmanns’s “unwillingness to engage in talks may be rooted in a conflict of interest.”

Oltmanns is a partner with law firm Menold Bezler, which has been retained by Asslar, Germany-based Pfeiffer in the past. Proxy advisor Institutional Shareholder Services classified Oltmanns as a “non-independent” in a March 8 note, citing the law firm partnership.

Oltmanns said the allegations are unfounded and his position at Pfeiffer isn’t compromised by his partnership at Menold Bezler. “We’ve been transparent and compliant with German law,” he said in a phone interview. Pfeiffer’s supervisory board and Chief Executive Officer Manfred Bender are willing to engage in talks once the boards have finished their assessment of the latest offer and have published a reasoned statement, due on April 26, he said.

Friendly Deal

“We met with the Busch family on April 4 on our initiative,” Oltmanns said, adding that it’s questionable whether Busch’s approach is a friendly one.

The spat sets the stage for an acrimonious shareholder meeting on May 23. With a 29 percent stake, privately held Busch is Pfeiffer’s largest shareholder. While it has supported Oltmanns in the past, Busch is seeking to replace him, according to the offer document.

The letter is the latest attempt to assert influence after cat-and-mouse tactics that saw privately-held Busch on March 15 surprisingly pull an unsolicited 96.20 euros-a-share ($103) cash offer for the approximately 70 percent stake it didn’t already own. It pounced back two weeks later with an improved 110 euros-a-share bid plus a special dividend of 3.60 euros, valuing Pfeiffer at about 1 billion euros.

“We don’t primarily intend to engage in a public spat over you personally and your function as chairman of the supervisory board, but we don’t shy away from it either,” Busch wrote to Oltmanns in the letter. “We’re prepared for the annual meeting.”

Share Gains

With about 3,000 employees and 467 million euros in 2015 revenue, the most recent year figures are available, Busch is comparable in size to Pfeiffer, which reported revenue of 474 million euros for 2016. Busch said its latest offer represents a 28 percent premium over Pfeiffer’s average share price in the three months prior to its initial bid.

Pfeiffer shares, which have gained 27 percent since Busch’s first offer on Jan. 24, was down 0.7 percent at 118 euros as of 2:26 p.m. in Frankfurt on Thursday.

Busch has said it plans to keep Pfeiffer listed on the Frankfurt stock exchange and run it as an independent company under its own management.