By Cecilia Butini
Shares in Osram Licht AG rose on Wednesday after it agreed on a domination and profit and loss transfer agreement with majority shareholder Ams AG.
Under the agreement--which paves the way for the creation of a combined sensor-solutions and photonics company--Osram shareholders would be compensated 44.65 euros ($52.28) for each share if they sold their shares to Ams.
The agreement also contains an annual net recurring payment of EUR2.24 a share, Ams said.
At 1150 GMT, shares in Osram traded 15.5% higher at EUR50.12.
The planned annual compensation payment presents a highly attractive return, Commerzbank said, noting that it represents a 5.9% yield based on Osram's closing price of EUR43.40 yesterday.
The agreement is contingent on approval by at least 75% of the votes of the extraordinary general meeting of Osram, which will be held on Nov. 3.
"Considering that Ams holds about 71% of the share capital, we take a very constructive view that the agreement will be reached," analysts at Commerzbank said.
However, the integration of Osram by Ams is seen as "challenging" by analysts at Bryan Garnier, who said it would be difficult for Ams to meet the EUR300 million in synergies that it expects within three years from the closure of the acquisition.
Bryan Garnier also sees the takeover deal as expensive and noted that Ams would need to spend EUR1.25 billion for the remaining shares of Osram, bringing the total acquisition price tag to EUR3.7 billion.
Write to Cecilia Butini at email@example.com