Complex Deals (?)

Introduction

What are complex deals and why are they “complex”?

Complex Deals (?)

Introduction

Complex Deals

Introduction

Structure Needed!

• Which transactions/complex deals do we observe in practice?

• Why and how do complex deals take place?

What are M&As that we typically read about in the news?

Pharma deals between late 2024 and early 2025

Acquisitions \(\rightarrow\) acquiring a controlling stake in a target’s shares: share deal

Complex Deals

Overview

Asset Deal and Share Deal

Acquisition

• Asset deal \(\rightarrow\) acquirer acquires (substantially all the) assets and liabilities of the target without buying the corporate shell/shares (complexity is increasing with the amount of assets because assets are transferred individually)

• Share deal \(\rightarrow\) acquirer acquires a controlling stake in the target’s shares

Merger

Reorganization

• Merger \(\rightarrow\) an existing, reorganizing company (BCo) merges into another company (ACo) and BCo ceases to exist

• Where’s the M in the M&A we read about in the news then?

Consolidation

Consolidation refers to a form of reorganization, not to “group-consolidation” financial accounting

• Both existing companies (ACo & BCo) merge and become part of a new legal entity (NewCo). ACo and BCo cease to exist as independent legal entities

• What are economic (think about the involved parties’ perceptions of the deal!) reasons for choosing a consolidation over a merger?

Merger of Equals

Reorganization

• Establishing a NewCo suggests that involved parties are on the same level playing field (no dominant partner, which performs a “takeover”)

• “Using the term merger of equals inevitably sets the parties up for unrealistic expectations of equality and integration.”¹

Upstream, Downstream, Sidestream

Reorganization within Group

Splitting \(\rightarrow\) Split-Up

Reorganizations

• Splitting is a technique to separate the assets and liabilities of one entity and to allocate them to multiple entities

• A split-up is the exact opposite of a merger or consolidation (why?)

Splitting \(\rightarrow\) Split-Up

Reorganizations

Definition

• The entity splitting up transfers its assets and liabilities as a whole to two or more already existing or newly-established entities

• The splitting entity is dissolved (without formal liquidation procedure)

• The shareholder(s) of the splitting entity obtain shares in the entities acquiring the assets and liabilities

• In comparison to a merger, the direction of the asset/liability transfer is reversed: many-to-one (Merger) vs. one-to-many (Split-Up)

Splitting \(\rightarrow\) Split-Off & Spin-Off

Reorganizations

• The splitting entity (SplitCo) transfers part of its assets and liabilities to one or more already existing or newly-established entities (ACo/BCo)

• Spin-Off \(\rightarrow\) SplitCo’s shareholders receive shares in ACo/BCo without giving up their shares in SplitCo

• Split-Off \(\rightarrow\) SplitCo’s shareholders exchange their shares in SplitCo for shares in ACo/BCo

Splitting \(\rightarrow\) Carve-Out

Reorganizations

• The splitting entity (CarveCo) transfers part of its assets and liabilities to one or more already existing or newly-established entities (ACo)

• Carve Out \(\rightarrow\) the transferring entity (not its shareholders) obtains shares in the entity or entities acquiring the assets and liabilities

• The entity acquiring assets and liabilities (ACo) becomes a subsidiary of CarveCo

Splitting

Overview

Siemens Energy

Reorganization

• FT 2024: Comeback from?

• Relationship between Siemens Energy and German conglomerate Siemens?

Siemens Energy

Reorganization

• In 2020, the German industry giant Siemens decided to divest its Energy business

• Siemens’ shareholders and Siemens itself became shareholders of Siemens Energy

• How can the splitting be characterized?

Siemens Energy

Reorganization

Spin-Off & Carve-Out Combined

• Siemens’ shareholders receive shares in Siemens Energy
• Siemens receives shares in Siemens Energy upon the transfer of assets
• Siemens reduced its stake in Siemens Energy to 5.5% post-transaction until 2026 \(\rightarrow\) Equity carve-out, when placing shares in carved out entity on stock market

“Siemens Energy outrallied NVIDIA this year”

2024 Stock Performance

Acquisitions & Reorganizations

Categories of Transactions

Lifecycle of Complex Deals

DePamphilis (2025)

• We now know common forms of complex deals but need to understand their lifecycle along several dimensions to navigate them effectively

\(\Rightarrow\) We’ll start with the role of Governance

Thank You!

Copyright

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