In Oriola, an interesting power struggle in front – this is the Herlin presentation

Medicine wholesaler Oriola The stock market trip has been quite a toddler. The company left the pharmaceutical company Orion as a listed company in 2006. The price development has been miserable and the dividends have not been sufficient to raise the return to the plus. During the same period, Orion’s share has produced many times better than the general index on the stock exchange. Also, Oriola’s Tuesday’s earnings announcement did not bring a boost, and the stock price was down a few percent in the afternoon.

There are only nine companies left on the Helsinki Stock Exchange with two listed equity series. Oriola and Orion belong to this group. The number of two -series companies has fallen rapidly in recent decades, as the pressure of international investors has contributed to dozens of companies to merge their equity series. Professional investors typically appreciate a clear one share -one voice principle. The EU and, for example, the ESG meters of the responsibility theme, for example, encourage the combination of equity series to increase transparency and good management.

The main difference between the two series of stocks is typically voting. One Oriola A-Series share has 20 votes, while the B-Series has only one vote. In this way, the owners of the A-Series shares are able to influence at the Annual General Meeting with a greater weight on their ownership.

Oriola’s largest owner Mariatorp In February, the Equity Series was required to merge the spring of the Spring General Meeting. Mariatorp is Heikki Herlin control community. On Tuesday, Oriola announced his Annual General Meeting notice, where Mariatorp’s presentation is included.

Mariatorp’s reasoning for the combination of the series is to improve the liquidity of the share, increase the market value of the company and clarify the ownership and voting structure. According to the main owner, it could increase Oriola’s attractiveness as an investment. This refers especially to professional investors, many of whom are separate voting sets are a red garment. They want the euro -denominated ownership to be determined by the company in the company. The typical fear of foreign investors is that there are cups in the ownership and that even smaller owners can crop decisions.

Previous attempts to merge went wrong

Efforts to combine the Oriola Equity Series has a long history.

In 2003, Orion’s Board of Directors proposed the merger of the A and B series while Oriola was still part of Orion. Orion owners, under the guidance of doctors, fell the proposal at the Annual General Meeting. At that time, it was used to make it easier to combine the bid to make a bid from the company. Also, the owners of voting A shares were not offered any premium for combining the series.

In 2014, Oriola’s Annual General Meeting, in turn, dealt with three major owners, Mariatorp, Varman and Ilmarinena proposal to combine equity series. Two-thirds of the shares voted in favor of the merger, but 56 % of votes opposed the proposal, with the votes of the owners of the A shares in a loud weight in the scales.

Revelations were, among other things, the Ylpön family Excitement and Riihimäki Health Light company Jorma Taipale. Into Ylppö, his brother Jukka Ylppö And Riihimäki Health Lightness is still among the 12th voting owners of the company. Jukka Ylppö is a member of Oriola’s shareholders’ Nomination Committee, which proposes the Board of Directors to the Annual General Meeting.

What is special about the Oriola Equity Series merging proposal is that the presentation comes again directly from the big owner and not from the board. This signals that the government has not wanted to be single -inch or has seen the conditions for the proposal pass. Now, however, there are more favorable opportunities for the performance than 11 years ago. However, the Oriola government made its recommendation on the presentation last night. The Board recommends the owners to vote at the Annual General Meeting for the merger of the stock series.

While Mariatorp, Ilmarinen and Varma owned a total of over 12 percent of Oriola’s shares and over 16 percent of voting rights, Mariatorp now owns nearly 15 % of the shares and over 13 % of voting rights. Mariatorp, Ilmarinen, Varma and Wipunen Fund Management own a total of nearly one third of Oriola’s voting rights. Wipunen is also known as the Herlin Asset Manager, and Wipunen Peter Immonen Among other things, 11 years ago, at the Oriola Annual General Meeting, he introduced the merger of the Mariatorp proposal.

Thus, these owners can be predicted to vote for one series of stocks. From the top of the list of owners Olli Herlin You can bet on the combination of series. Information service Holdings according to a private equity investor Triton is Oriola’s largest visible foreign owner. Triton is remembered, among other things, a building technology company Caverion from the Helsinki Stock Exchange.

However, the voice of the major owners at Oriola’s Annual General Meeting has a lower weight than normal. The Oriola shareholder may not vote with a higher number of votes with more than one twentieth of the total number of shares represented in the various shares represented at the general meeting.

The premium refunds the decline in voting rights

Mariatorp’s presentation this spring presentation offers A-shares owners for one new shares for each 14 shares. In practice, this means about seven percent premiums for a reduction in voting rights. The corresponding premium was also on the table in a performance of 11 years ago that did not go through.

The seven percent premium is a fairly typical compensation for a reduction in voting rights in combining equity series, although one cohesive model has not been seen in Finland.

Stock Exchange for decades closely followed Kim Lindström wrote about the unites of equity series in 2014. According to him These, Nordea and Nokia In the 1990s, they combined any premium for the owners of the voting series for the loss of voting rights to the owners of the voting series. This led, among other things, to Nokia to the fact that Finns’ decision -making power was instantly shrunk without compensation.

In the 21st century, the owners of voting shares have typically received some kind of premium, according to Lindström’s accounting, typically 5-15 %.

Last year The owners of Central Finland voting rights received an exceptionally plush, as much as 20 % premium in connection with the merger of the equity series.

In connection with the merger of equity series, the premium is easily raised by strong statements at the general meeting. According to the owners of the voting rights, the proposed premium may be too small, while the owners of the second series may not see any reason for paying any kind of premium. Of course, the premium paid to the owners of the voting rights shares will reduce the ownership of the second series owners from the company.

The shares of smaller voting rights are typically a livelier exchange on the stock exchange, which has the advantage of better liquidity. Indeed, the shares in the two series of stocks often speak of the exchange series and the sound series. One has enough exchange volume, the other with sound power.

Realization requires extensive approval

The merger of Oriola’s equity series requires two -thirds of the votes cast at the Annual General Meeting and the shares represented at the meeting.

In addition, the ruling of the decision requires that the majority of each of the shares represented at the meeting should be supported by the decision and consent from the majority of the owners of a shares whose rights are reduced.

In 2014, at the Oriola Annual General Meeting, the merger of the equity series received 44 % support and 56 % in terms of resistance, although 67.2 %, or the majority of the shares represented at the meeting, were in favor of the merger.

74 % of B shares voted in favor of one stock series.

What should the Oriola owner do?

It is possible that at the Oriola Annual General Meeting, the voting on the Mariatorp’s proposal will be tight again, even if the main owners and international investors are on the wide front of one series. When the general meetings are typically mainly rubber stamps for the company’s board of directors, now, with the voice of every smaller owner, there may be an effect.

It is therefore advisable for the Oriola shareholder to attend the General Meeting, or at least vote in advance of the proposal for the joint series, whether in favor of or against the merger.

Included, supporting the unification of equity series is a voice for maximizing the owner value and opposing the combination of the sound to ensure Oriola’s independent.

As international investors rejected companies in two series of equity series, the merger of Oriola’s equity series would allow the company to end up with more and more investors. Structural arrangements would also be greatly facilitated when, for example, a potential buyer or a fusion proposer would have a clear view of how many of Oriola’s largest owners should get the proposal side.

Oriola may be an interesting purchase for venture capitalists such as Triton, who have their own processes for a turning point in deteriorated companies. Oriola’s adjusted operating margin is scarce over 1 %. The potential earnings lever is huge if some percentage points can be laid up. As a pharmaceutical wholesaler, Oriola acts in practice in Finland as a duopop Tamron with.

Some Oriola owners may be reluctant to sell the company abroad. In this case, from this point of view, holding from the vote series is logical.

If blocking a potential acquisition is not a heart rate for Oriola owner, combining equity series seems to be a rational option. It enables a broader ownership structure and is likely to have a positive impact on the company’s market value. Above all, it enables different mergers and acquisitions.

The poor performance of Oriola in value creation, combined with the desire of the capital owner, tells the stock series that the capital owner sees the merger of stock series as a positive thing for the company and better value nature.

It is also worthwhile for a small owner to consider why the main owner wants to combine the equity series and why the small owner would not want to combine the shares. In any case, voting is worthwhile at the spring general meeting, as each vote can affect the typical general meeting in the case of Oriola.

Over the last five years, the Oriola A share course has been on average by 5.6 percent higher than the B-share course. From this point of view, a seven percent premium is reasonable.

The Oriola Annual General Meeting will be held on 2 April in Hanasaari, Espoo.