The Baloise Group was attacked by a “vulture fund” and no longer exists. Something similar could now happen to the Swatch Group.
At first, the management of the Baloise Group took it lightly.
The attacker, Cevian, invested in the Basel-based insurance group, and the official line was that this was a good sign.
A harmless-sounding request
But then the small asset manager zCapital dealt the insurer a fatal blow with an unusual motion to the Annual General Meeting (AGM).
This long-standing shareholder proposed lifting the transfer restrictions at Baloise and introducing the “one share, one vote” system.
With the removal of voting and registration restrictions, major shareholders would have been able to implement a different corporate strategy.
Even the breakup of the group would have been possible as a result.
Previously, the board of directors would have simply rejected such proposals by invoking the two percent voting restriction.
Proxy advisors weighed in
Yet, at the AGM, over 75 percent of Baloise shareholders surprisingly supported the motion to lift the restriction on shareholder rights.
The initiators were aided by the fact that proxy advisors endorsed the “strengthening of shareholder democracy.”
ISS (Institutional Shareholder Services), Glass Lewis, the Ethos Investment Foundation, and the Swiss corporate governance specialist Inrate all voted in favor, despite the board of directors’ opposition, securing the qualified majority.
Investor buys block of shares
The initiator, zCapital, stated in the run-up to the meeting that the Baloise board of directors was isolated in its opposition.
The rest is history. Cevian sold its Baloise shares to a strategic investor shortly before the AGM, paving the way for a Swiss solution.
Instead of being broken up, Baloise was integrated into the Helvetia Group and disappeared.
Investor Demands Changes
Many long-established Swiss companies currently have voting restrictions or safeguards in place to prevent them from becoming takeover targets.
Recently, the Biel-based Swatch Group has repeatedly made headlines in this regard.
Investor Steven Wood of Greenwood Investors wants to join the watchmaker’s supervisory board and implement a different corporate strategy for the well-known brands Swatch, Tissot, Omega, Hamilton, Rado, Mido, Breguet & Co.
He holds less than one percent of the voting rights, yet Wood wants to have a significant say. This is exactly how it all began with Cevian at the Baloise Group.
Over 20 tons of gold beckon
Wood has already failed once with this plan at the Swatch Group.
But this time, the activist investor from New York has taken a smarter approach and explained the complicated voting mechanism at the Swatch Group’s AGM to all shareholders in advance.
Furthermore, according to a legally-drafted letter, Wood insists that, in addition to his appointment to the board of directors, physical AGMs be held in the future and that PwC, the auditor in office since 1992, be replaced.
The latter is interesting, as Swatch has over 20 tons of gold sitting on its balance sheet at cost. In the meantime, this has turned into a treasure.
Convincing Other Investors
All of these proposals have now received the endorsement of proxy advisor ISS, as Greenwood Investors of New York – the firm behind the “vulture fund” – announced on Monday.
With ISS’s endorsement, Wood’s chances of success at the AGM on May 12 have improved, as many shareholders tend to vote in line with proxy advisors’ recommendations.
On Tuesday evening, the Swiss investment foundation Ethos also published its criticism of the Swatch Group’s corporate governance.
This means that the activist investor, even though he holds less than one percent of the voting rights, could still join the Swatch Group’s board of directors.
Corporate governance – specifically, board members who are allegedly not independent – is being cited as the justification.
To fend off the threat, the Biel-based watch group has so far “armed” itself with only one additional Swiss member on the board, as reported by muula.ch.
Annual elections as an additional problem
The company, dominated by the Hayek family of entrepreneurs, is likely to have a hard time shaking off the activist investor.
Certain strategic question marks and poor results make the watch group an ideal target.
A breakup would be lucrative because the individual watch brands, the global real estate holdings, and the tons of gold are certainly worth more separately than bundled together in a group.
Given that board members in Switzerland are elected for one-year terms, it is possible to replace all members of the supervisory board at once, making a strategic shift within a company much easier.
Switzerland might want to consider reversing this annual procedure.
The U.S. Sets Its Sights on Switzerland
By claiming to promote better corporate governance, attackers can apparently achieve a great deal in Switzerland these days.
They have the U.S.-dominated proxy advisors – and thus institutional investors – on their side.
The victims are Switzerland’s long-established companies, which seek to fend off hostile takeovers through their boards of directors.
But that is exactly what the management of the insurer Baloise initially thought. And then, after more than 160 years, the long-established company simply vanished – never to be seen again.
April 28, 2026/kut./ena.
