Return to search

Flowers sues in Germany

JC Flowers has carried out an earlier threat to sue as Germany’s bail out fund attempts to squeeze out the remaining minority investor in Hypo Real Estate.

JC Flowers launched legal action last week following attempts by the German government to squeeze the minority shareholder out of Hypo Real Estate.

The firm said in a statement that funds it advises had taken legal action seeking to prevent the full nationalisation of the German bank, which it invested in during 2008.

The government’s actions represented a “violation of constitutionally protected ownership rights and result in the expropriation of shareholders”, Flowers said in a statement. It has also lodged a complaint with the European Union.

The lawsuit, filed in Munich last week where Hypo is based, is aimed at preventing the state sponsored SoFFin rescue fund from taking 100 percent control of Hypo.

Majority shareholders voted for a squeeze out for €1.30 per share on 5 October. That is when the German state used its majority shareholder status to force through the formal vote.

Flowers originally teamed up with Grove International Partners and Japan’s Shinsei Bank in the spring of 2008 to acquire a stake in the company for €22.50 a share. Grove has since sold out, according to people familiar with the matter, but Flowers retains around a 3 percent stake.

Earlier this year, Flowers said it was considering legal action when the German government announced plans to natioanalise Hypo having bailed it out with tens of billions of euros in cash and guarantees.