Hedge Fund Blamed for German Exchange’s Layoffs
by Paula Schaap, Reporter , November 12, 2007
Deutsche Börse, the Frankfurt-based stock exchange, is once again under fire to return money to investors from U.K.-based hedge fund firm The Children’s Investment Fund, according to one report.
The exchange will lay off about 200 employees, according to a report in the German business newspaper Handelsblatt.
The report attributed the layoffs to pressure from activist hedge fund manager Chris Hohn, founder of TCI to streamline operations and return as much money as possible to stockholders.
Hohn is known for buying up stakes in exchanges, as well as other companies, and then taking an activist stance. In 2005, TCI along with hedge fund firm Atticus Capital, was one of the leaders of a shareholder revolt against Deutsche Börse’s planned merger with the London Stock Exchange. Werner Seifert who was the head of the exchange at the time, engaged in a public war of words with Hohn, but then left the exchange after the deal went south.
Germany has a strong antipathy to hedge funds, best exemplified by the term used to characterize them: “locusts.” Last month, the country’s cabinet approved a bill that would require hedge funds’ financing terms. The proposed law also requires hedge fund firms to reveal their plans for a takeover target if they acquire more than 10% of its stock.
The German parliament still has to approve the bill, but observers say that it is likely to pass early next year.
A call to Deutsche Börse was not returned by press time.
Deutsche Börse, the Frankfurt-based stock exchange, is once again under fire to return money to investors from U.K.-based hedge fund firm The Children’s Investment Fund, according to one report.
The exchange will lay off about 200 employees, according to a report in the German business newspaper Handelsblatt.
The report attributed the layoffs to pressure from activist hedge fund manager Chris Hohn, founder of TCI to streamline operations and return as much money as possible to stockholders.
Hohn is known for buying up stakes in exchanges, as well as other companies, and then taking an activist stance. In 2005, TCI along with hedge fund firm Atticus Capital, was one of the leaders of a shareholder revolt against Deutsche Börse’s planned merger with the London Stock Exchange. Werner Seifert who was the head of the exchange at the time, engaged in a public war of words with Hohn, but then left the exchange after the deal went south.
Germany has a strong antipathy to hedge funds, best exemplified by the term used to characterize them: “locusts.” Last month, the country’s cabinet approved a bill that would require hedge funds’ financing terms. The proposed law also requires hedge fund firms to reveal their plans for a takeover target if they acquire more than 10% of its stock.
The German parliament still has to approve the bill, but observers say that it is likely to pass early next year.
A call to Deutsche Börse was not returned by press time.
Labels: Deutsche Börse, Germany, layoffs
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