Gunsmith - Power struggle continues: H&K shareholders' meeting ends abruptly
At Heckler & Koch weapons manufacturer, a power struggle between two major shareholders continues to cause unrest. The annual general meeting in Rottweil was disrupted after an application by one of these shareholders' lawyers. The reason was that the necessary attendance of over 50% of the share capital was not reached. Consequently, the chairman of the supervisory board, Rainer Runte, had to prematurely end the ongoing meeting. The meeting must now be held again within three months.
Quarterly figures with profit decline
Meanwhile, the largest manufacturer of handguns announced figures for the first quarter of 2024: While the revenue increased by 1.8 million Euro to 75.0 million Euro, the net profit dropped from 10.0 million Euro in the previous fiscal year to only 2.4 million Euro. The company attributed the development to seasonal fluctuations: In some contracts, the deadlines and thus the revenue and profit effects were outside of the first quarter. The company's CEO, Jens Bodo Koch, remained optimistic during the shareholders' meeting that the growth trend of previous years would continue. The company is expected to grow by over 100% in terms of revenue in 2024 compared to the previous year, and the operating result (EBITDA) is expected to be above the previous year's value, the manager said.
Shareholders have been disputing since 2019
The shareholder showdown, which escalated on Tuesday and led to the cancellation of the annual general meeting, has been going on since 2019, with both parties taking legal action against each other in several courts. It is about the German investor Andreas Heeschen, who had been the majority shareholder of the largest German handgun manufacturer for a long time, and about the Luxembourg financial holding CDE. Heeschen, according to the financial holding's statements, transferred a total of 15 million shares to CDE for 163 million Euro since 2015.
At a certain point, the CDE demanded the transfer of the shares. According to their legal understanding, the ownership and thus the voting rights had passed to the CDE at the end of 2019. Heeschen saw it differently; he saw himself as the owner of the shares. A legal dispute before the Regional Court and the Higher Regional Court Frankfurt ensued. Since Heeschen appealed to the Federal Court of Justice (BGH), there is no legally binding judgment yet.
Due to this unresolved legal issue, the supervisory board chairman Runte decided not to allow a controversial share package worth almost 40% of the share capital to be voted on at the annual general meeting - neither for CDE nor for Heeschen. However, he assumed that Heeschen would still participate in the meeting with another, smaller share package. Since this did not happen, only 48% of the share capital was represented at the shareholders' meeting. Consequently, Runte pulled the emergency brake and cancelled the annual general meeting.
A representative of CDE was indignant about Heeschen's actions. "It shows that Mr. Heeschen is trying to enforce his alleged own claims on the back of the company, causing costs and unnecessarily tying resources of the company," said CDE representative Andreas Gregor to the dpa. He pointed out that Heeschen had not fulfilled his obligations under the pledge agreements. "Despite repeated requests, he neither transferred the shares nor paid off the loans that fell due at the end of June 2022."
At the annual meeting, Heeschen was not personally present. He wanted to exchange two supervisory board members, who represent CDE on the supervisory board, through his lawyer Oliver Krauss. However, he would have needed the voting rights from the 40% share package for this. This didn't work out. As a result, he caused the entire annual meeting to collapse.
Key figures for the Armory
Heckler & Koch had around 1100 employees last year and generated a revenue of 301.4 million Euro. Around 1000 people work at the plant in Oberndorf in the northern Black Forest. Among the competitors are C.G. Haenel from Thuringia, Beretta from Italy, FN from Belgium, and the Czech weapons manufacturer CZ, to which the US firm Colt also belongs. The largest H&K customer is the Bundeswehr, which will receive a total of 120,000 new assault rifles from Oberndorf in the coming years - this large order will significantly boost H&K's cash register.
- The defense industry giant Heckler & Koch, based in Baden-Württemberg, is currently embroiled in a power struggle between two major shareholders, which has originated from disputes since 2019.
- Despite the ongoing legal battle between the shareholders at the Federal Court of Justice, the company announced its quarterly figures for 2024, showing a revenue increase but a decrease in net profit.
- The annual general meeting in Rottweil, organized by Heckler & Koch, was disrupted due to a shareholder's application, leading to its premature cancellation as the necessary shareholding attendance was not met.
- The power struggle between Andreas Heeschen and Luxembourg financial holding CDE, a key player in Heckler & Koch's shareholding, has caused heated debates and unrest within the company, leading to the cancellation of the annual general meeting.
