GERMANY Trends and Developments Contributed by: Carsten Berrar and Peter Klormann, Sullivan & Cromwell LLP
into effect in March 2023, provide a statutory legal framework for cross-border spin-offs and similar structures for the first time, which could further support reorganisational M&A across the EU. Many companies in Germany also find them - selves in the midst of transformational changes. For example, German industrial activity has gradually declined over the years, particularly manufacturing, pushing businesses to increas - ingly rely on technology. Digitalisation continues to be a major chal - lenge, including for the country’s infrastructure and administration as a whole. This ongoing push for digitalisation, which has recently been boosted by the public launch of novel artificial intelligence (AI) products like ChatGPT contin - ues to be a key driver for companies using M&A to transform their business models and acquire the AI and digitalisation capabilities they need. Other transformational deals can be motivated by environmental, social and governance (ESG) considerations, as companies seek to divest less ESG-friendly activities or improve their ESG profile through acquisitions. At the same time, the automotive industry must adapt to the disruptive switch to electric vehicles, while competitive pressure from Asia remains strong. 2024 was then characterised by a decline in the development towards elec - tric vehicles, which put further pressure on the automotive industry. Such developments can require consolidation and frequently lead to reorganisations and M&A. The merger of Vitesco into Schaeffler and Continental’s announced spin-off of its automotive business represented prominent examples of such trend in the Ger - man car supplier industry. In February 2025, the next such transaction was announced, when ZF
Friedrichshafen revealed its plans to spin-off its electrified driveline division. Some players also seek new partners to cope with the challenges. For example, German automaker Volkswagen agreed to invest in US- based electric vehicle (EV) maker Rivian to form a joint venture aimed at developing and shar - ing EV architecture and software. Consolidation (through M&A) has also become an important topic in other industries, including the banking sector and previous strong growth sectors like An additional driving force for transformational transactions is activist investors, who have dem - onstrated a stronger and growing presence in Germany in recent years. 2024 saw continued strong activity, with more than 60 public activ - ist campaigns in Europe, according to reports. This trend can also be seen in Germany. Activists often pressure boards to simplify group struc - tures and engage in spin-offs or similar trans - actions. ESG-related topics are also on many agendas. Notable examples of German activist cases in 2024 include Sachem Head Capital Manage - ment’s campaign at Delivery Hero and the entry of Active Ownership Capital in HelloFresh. Mis - ter Spex is also worth mentioning, where activ - ist shareholders sought strategic changes in the company and (unsuccessfully) demanded the replacement of three supervisory board mem - bers, the reduction of bonus payments to man - agement board members and a comprehensive special audit, among other things. TMT and e-commerce. Shareholder activism Other recent examples include campaigns by activist shareholders at Bayer, Brenntag, Deutsche Wohnen, Teamviewer, RWE, SAP and
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