Enkraft, an activist fund, urges ABO Energy in a letter to develop a fair M&A procedure.

Enkraft, an activist fund, has written to ABO Energy in Germany to ask them to make sure that all shareholders benefit from the sales process initiated by renewable energy firm. They were concerned that smaller investors would lose out if there was a change of management.

ABO Energy announced in late September that it had asked Metzler, a private bank, to provide advice on a potential deal where the founders of ABO Energy -- whose families collectively hold 52% -- could cede control to a third party investor.

The German takeover law states that if a suitor crosses the threshold of 30% ownership, they must submit a full bid. However, this rule does not apply on the open market where ABO Energy trades.

Enkraft, who owns over 4% of ABO Energy said that management is still required to treat all shareholders equally in the sale process, and to give them the opportunity to sell their shares if there's a buyer.

Enkraft stated in a letter from November 5, which was seen by that management must act in the best interest of all investors if they are "involved with preparing the acquisition". This could be by providing nonpublic information to assist in due diligence, or directly appointing a bank of advisors for a select few shareholders.

Enkraft has criticised the company for its strategic decisions, most notably its recent change to its legal form which it claimed had hurt its ability to access capital markets.

ABO Energy declined to comment. (1 euro = 0.8623 dollars) (Reporting and editing by Susan Fenton; Reporting by Christoph Steitz)

(source: Reuters)