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 a suitor must submit a full bid to acquire ABO Energy once they have crossed the threshold of 30% ownership. However, these rules do not apply on the open market which is less regulated and where ABO Energy trades.

A spokesperson from ABO Energy said that the company, which is valued at approximately 315 million euro ($365 million), would strive to make a deal that was fair for all investors.

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 harmed its access capital markets. Reporting by Christoph Steitz, Editing by Susan Fenton. $1 = 0.8623 euro

(source: Reuters)