Saturday 12th December 2020
Limit foreign influence
Federal government buys shares in armaments company
The federal government is spending almost half a billion euros on joining the Hensoldt group. In this way, the federal government is trying to prevent the manufacturer of sensors and encryption technology for military use from being exerted from abroad.
According to parliamentary circles, Germany is joining the armament electronics group Hensoldt. The federal government is taking the option agreed in the course of Hensoldt's IPO and taking a 25.1 percent stake in US financial investor KKR, a person familiar with the plans told Reuters. The price for the package is 464 million euros – a premium of a good third to the Hensoldt share price. Two other insiders confirmed the entry plans. The purchase option expires at the end of the year.
With the blocking minority, the federal government wanted to prevent foreign influence on the former Airbus subsidiary, which, according to a legal opinion, is only possible in this way, it said in parliamentary circles. Sensor technology and encryption technology for military use are considered key technology, especially for the Bundeswehr. The shares are to be parked at the state bank KfW. The federal government does not want to exert any operational influence. The budget committee of the Bundestag only has to take note of the entry; a formal vote is not necessary.
The Hensoldt share had already shot up by four percent to 13.06 euros on Friday after rumors about the transaction in Berlin had made the rounds. The purchase price agreed with KKR is arithmetically around 17.60 euros per share, but thus below the maximum amount of 600 million euros that the federal government and KKR had set. When the company went public, the shares were issued at EUR 12.00.
The US investor can thus reduce its stake in Hensoldt from 63 to around 38 percent. KKR took over the manufacturer of high-tech cameras for Tornado aircraft, tank periscopes and radar systems for the Eurofighter 2016 from Airbus for 1.1 billion euros. At that time the government had secured strategic influence for itself with a kind of "golden share". The agreement had been modified before the IPO.
FDP criticizes the "premium price"
Participation from the FDP is viewed critically. "On the stock exchange, the share package is valued at 25.1 percent, as of today, at 320 million euros. The federal government is paying 450 million euros for the package," said the chairman of the FDP parliamentary group in the defense committee, Alexander Müller. The goals of the federal government at Hensoldt are unclear. With a participation, however, the federal government can no longer be a neutral buyer. "Obviously there was no need to protect the company from access by other nations, such as China. Several European competitors are buying blocks of shares. The federal government does not have to pay a premium price with taxpayer money," said Müller.
The company history of Hensoldt goes back more than 125 years: In 1892 the optician Moritz Hensoldt built telescopic sights for the rifles of the Prussian army. The group now employs around 4,400 people and generates billions in sales. One of the company's future projects is to be involved in equipping the new Franco-German fighter jet, which cost billions of euros and is by far the largest European armaments project at present.
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