DCC – Interesting “Special Situation” following KKR potential buyout offer at 58 GBP ?

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Disclaimer: This is not investment advice. PLEASE DO YOUR OWN RESEARCH !!!!!

DCC is an investment I made back in December 2022. The investment thesis back then was that it was a successful compounder/serial acquirer that had the opportunity to grow further through its 3 platforms (Energy, Healthcare, Technology).

In the meantime, a lot of unexpected things happened. After issues in the non-Energy segments, DCC is currently transforming itself back into the original Energy distributor and sold already a significant part of its non.Energy businesses. The transformation has progressed well including a share buy back tender but is not finished yet.

Looking at the share price, we can see that not much happened over the last 5 years but that the timing for buying into DCC in Dec 2022 retrospect was quite lucky:

After the recent jump to 58 GBP, I am up 42% in total (in EUR, including dividends) which is not spectacular and rather at the lower end of my expected outcome. However, given the “Pivot” it is still a decent result and mostly attributable to the low entry point and the relevant dividends.

Now fast forward to last week: 

Private Equity behemoth KKR and another energy focused PE called Energy Capital Partners approached DCC and seem to have informally offered to take over DCC at 58 GPB per share which only represents a 15% premium over the average share price for the last few months.

DCC immediately declined the offer as “too low”.

Energy Capital Partners is a pretty large Energy focused US PE/Infrastructure investor that owns a lot of “Energy Transition” businesses. AuM seems to be north of 40 bn USD.

Although KKR did not disclose which fund is bidding, it looks that both KKR and ECP see this as an infrastructure play which makes a lot of sense.

58 GBP per share is clearly a low ball offer and no formal offer has yet been made. Under the applicable Irish laws, KKR has time until June 10th to either submit a formal offer or walk away.

From a shareholder perspective, I assume that maybe a lot of investors have been frustrated that the stock only went sideways for the last 5 years or so and are maybe happy to exit at that level.

The “asset heavy” Infrastructure PE playbook

DCC so far has operated as a relatively capital light distributor, but I think it is relatively easy to pivot them into an Infrastructure like business that usually enjoys significantly lower cost of capital.

In contrast to “normal” Private Equity, Infrastructure Private Equity still enjoys a pretty good time. Many players have raised large funds and are eager to deploy money. Infrastructure is often considered “AI safe” these days.

So I guess there might be a chance that some other players might look very closely at this situation. DCC is a very obvious target and the timing is quite nice from a PE perspective. The refocusising on Energy at DCC is still underway and the results don’t look so “clean” at the moment,

DCCs business model, especially the LPG distribution business has a lot of potential to get easy access to many SME companies and sell them solutions.

Especially the current volatility in fossil energy prices opens up a unique selling opportunity for solutions that offer less exposure like rooftop solar etc. 

According to TIKR, DCC’s Net debt to EBITDA ratio is only around 1,2x. The company is valued at around 7xEV/EBITDA. The typical infrastructure playbook would be to make the company more “asset heavy”. Due to the low gearing, this could be financed by more leverage. A typical “asset owning” infrastructure company with longer term contracts can be easily levered 4-5x Net debt/EBITDA, 

In DCC’s case, with around 900 mn in EBITDA, increasing the leverage ratio to 4x would allow them to issue almost 3 bn in debt which could finance a lot of assets. Those assets then will automatically increase EBITDA,

A stabilized infrastructure like company can then be sold at much higher multiples, usually at 12-15x EV/EBITDA. So the value creation potential for a good Infrastructure PE shop is significant. 

Just for fun I did a high level calculation how that exercise would look from this perspective (I just took the current numbers from TIKR, before further disposals):

A potential IRR of above 20% p.a. is highly attractive for an Infrastructure fund and as I have written before, PE’s have some more levers to “juice up” the IRR and earn even higher performance fees.

Is DCC now an interesting special situation play ?

There is clearly the risk that DCC might reject even higher offers, but I do think the 58 GBP low ball offer provides a decent “floor” for the stock (“Anchoring effect”).

For one, DCC should expect some positive operational tailwinds. Volatile and high energy prices in the past have been good for DCC’s energy business. As we can see every day “at the pump”, distributors like normal Petrol stations immediately increase prices although they often have inventories for some weeks/months and often drop prices much slower.

Looking back to the last energy price shock in 2022, we can see that this was DCC’s best year, especially for the energy business:

Although there is no guarantee that the same will apply to 2026, there is a high likelihood that 2026 will look good for DCC from an operational perspective.

In addition, I do expect that the transformation will be more or less completed in the 2026 calendar year. 

So all in all, 2026 seems to look pretty good for DCC. I think this also explains the timing of KKR and ECP, as they don’t want to wait until this improvement shows in the results of DCC.

Even in case, DCC gets sold relatively quickly at 58 GBP per share, one would still get the Dividend that will be recorded end of may.

Quick handicapping exercise:

Overall, I would see the probabilities as follows until the end of the year::

25% probability of no deal with 55 GBP as the outcome (plus dividend, currently estimated at 2,10 GBP/share)

15% of a deal at 58 GBP (plus dividend)

60% probability of a better deal. My guess here would be 70 GBP plus Dividend

This is the quick and dirty calculation:

So based on my assumptions, my probability weighted expected return is around 16% until year end. This looks attractive to me, as in my opinion, the downside is very limited.

Of course, all the assumptions can be challenged and changed.

Summary:

So in total I see the following situation here:

  • The bid of 58 GBP is clearly too low
  • DCC’s short term operational results are supported by increasing energy prices
  • in addition, the full effect of the transformation “back to energy” will materialize in the following quarter
  • Other Infrastructure funds might also be interested in DCC

So even if the bid from KKR would not be successful, I do think that the share price has much more upside than downside potential at the moment.

From that perspective, I decided not to sell any DCC shares but rather increase my position by ~1,5 % of total portfolio value at around 57,50 GBP per share.

Bachem AG: Riding the “Golden Age of Peptides” with this Hidden Champion from Switzerland

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Disclaimer: This is not investment advice. PLEASE DO YOUR OWN RESEARCH !!!

  1. Elevator pitch:

Bachem is a 5 bn CHF market cap Swiss listed pharmaceutical/specialty chemical company which is the global market leader in the (outsourcing of) manufacturing of Polypeptide, a complex molecule and Active Pharmaceutical Ingredient (API) that is, among others, behind the blockbuster drugs Wegovy, Ozempic etc. Demand for those molecules is poised to grow exponentially over the coming 5-7 years (15% market growth p.a. ,“Golden age of Peptides”). 

This growth is driven by several different fundamental growth drivers which increases the certainty of the projected growth rates. The complexity of the production process in addition to regulatory requirements and “Anti China” legislation in the US provides a decent “moat” for the coming years which makes Bachem, despite its relatively high valuation (28×2026 P/E), a very interesting investment case on a 3-5 year time horizon in my opinion.

It is clearly not an investment for everyone, but for more growth oriented investors, Bachem could be an interesting stock to look at. In my case, it is a 3% position for my small “quality growth bucket” alongside Wise and Chapters Group.

  1. Some editorial remarks:

Initially, I planned to write up and invest into both Bachem and its Swiss listed competitor Polypeptide Group. Due to vacation time and the rumour of a PE take-over, Polypeptide share price increased by +50% since I started to deep dive into those two companies which made the stock less attractive. Bachem only went up like +15% so  I therefore concentrate on Bachem.

In addition, I just wanted to make it clear that I write “by hand” but I do use several AI tools during my research (NotebookLM, Claude Cowork). You will find some output of AI models here in this write-up, as for some cases (i.e. making pictures), AI has just much better capabilities than I have.

In any case, I do expect a lot of critical comments on this.

  1. Soundtrack:

In order for my readers to actually listen to the obligatory soundtrack during reading the write-up, I’ll post it right at this spot. I think “Golden Years” from David Bowie is the perfect Soundtrack for this

David Bowie Golden Years

And here is the complete write-up (28 pages), Have fun !!!

Bachem 21.04.2026Download

Some links 13/2026

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Rob Vinall’s 2025 letter to investors is worth reading, as he also discusses why he sold some positions (Prosus, PDD, International Pet.)

A good reminder that Value Investing only works long term if it stops working short term 

Despite the rhetoric, Stablecoins are rarely used for actual payments

An epic write-up on the “Seabed economics landscape”

Some interesting thoughts from Heavy Moat on Capital allocation and the virtue of dividends

Jamie Ward with a nice write-up on Chapters Group

Sixt competitor Avis experienced an epic short squeeze this week. How needs fundamentals these days anyway ?

Deja vu all over again: Allbirds vs. Zapata’s 1998 “fish oil to Dot.com” Pivot

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For the older investors among my readers, the name Zapata maybe rings a bell.

In 1998, US fish oil producer Zapata announced that they had enough of fish oil and planned to go big time into the “Internet business”. The history of Zapata itself reads like a novel, among other it was owned in its various incarnations (Real oil company, fish oil nutrition etc.) by George Bush Sen., The Glazer family, Wilbur Ross and Phil Falcone.

As one could imagine, the Dot.com Pivot was not very successful. The final “pivot” then was to transform into the company that is now called Spectrum Brands, a medium successful collection of consumer products. The long term Chart of Spectrum from Google also shows the short & crazy spike from the Dot.com Pivot.

This sounds very similar to Allbird’s recent move to transform from a failing Sneaker company into a super sexy Ai GPUaaS company.

History doesn’t repeat itself but as the saying goes, it rhymes.

If I want to draw some learnings from the Zapata episode, I would point out two things:

  1. The Allbirds Pivot will most likely not lead to long term shareholder value creation
  2. In Zapata’s case, the peak of the bubble was still ~2 years away (April 2018 vs. March 2020). I would not take this as a benchmark but the experience shows that bubbles like Dot.com and potentially also the AI bubble part can run much longer as anyone imagines. Trying to time a bubble based on episodes like this is very difficult.

In any case, the Zapata example shows that rarely anything is new in investing and a pivot of a non-sccessful company into the “hot thing of the moment” company is an old strategy. I guess we will see a lot more of this in the coming weeks / months as the Allbird example has made the backers of this pivot some serieous money.

Some links 12/2026

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Semaglutide Generics (Wegovy, Ozempic) are now available in India at a fraction of the cost of the original

A great article on what makes companies really “durable”

An interesting deep dive into Disney’s theme park business

Very timely: Joachim Klement’s Football Worldcup prediction for 2026 with a very surprising favorite

Interesting viewpoint on why friction can be good in society and AI removing friction is maybe dangerous

The Mr. Market Miscalculates Substack looks at Pomegranate Investment AB, a Swedish OTC stock that invests into Iranian businesses

VC legend Bill Gurley clearly explains why Share based compensation is a real expense

Some links 11/2026

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Great interview with Dan Rasmussen from Verdad Capital 

A few very good lessons from Todd Wenning on starting an Asset Management firm

A good rule of thumb on when to invest into interesting Spin-off stocks

Interesting analysis what is going on in “Private Credit” from Edelweiss Capital

Everything from the Sector Stories Substack is worth reading. The Q4 Global Spirits overview is no exception to this.

Great deep dive from Prof. Damodaran why everyone needs to find his own long term  investment philosophy

Check out “DeathbyClawd”, a funny online tool that will check any company on its ability to survive the “SaaSpocalypse”

Panic Journal 2026 Spring edition – Trump/Iran, SpaceX/Indices and German NatGas storage problems

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Disclaimer: This is not investment advice. PLEASE DO YOUR OWN RESEARCH !!!

Time for another “Panic Journal” episode after the last one is already from one year ago. Writing about this is for me the best way to structure my thoughts and maybe it is of interest for some of my readers, too. Towards the end, there is even some kind of “actionable” content, too.

Trump/Iran:

I think the best advice on how to react to whatever Trump is saying is not to try to time anything here. As German “Finfluencer” Christian W. Röhl keeps saying (freely translated): “If you always react to what Trump is saying, you won’t make money, you just become (equally) insane”.

Last year, this was about Tariffs, then it was about Greenland and now it is about Iran. Who knows what is next. Maybe attacking Australia for some reason ? Who knows.

From a more strategic perspective, the narrative that the Trump administration is “good for business and the economy” seems to be now permanently broken.

Yes, Corporate Taxes in the US are lower, and Mr. Trump wants the stock market to be up “bigly” but the uncertainties around tariffs, “ideologically” driven crack downs on immigrants, careless international relationship management  and potentially even much larger government deficits due to increased military spending are slowly showing their impact. 

Another example: The White House has been celebrating net negative migration yesterday, but population growth has been one of the distinct drivers of US growth in the past, mainly through “household formation” especially compared to Europe or Japan. I guess this tailwind will have disappeared already, along with the immigrants who actually are supposed to build the houses.

Maybe, but only maybe, the AI build out can compensate for all of this, but maybe not. My very subjective impression is that the famous “American Exceptionalism” for stocks seems to be depending now fully on the success of AI. Which I think is quite risky. The annual letter from Bireme Capital, to which I had linked to captures most of this and more.

SpaceX/Indices

As my readers know, I have actually a small “side bet” on the SpaceX IPO with my position in Rocket Internet. Now more and more details become available about how this will work.

Basically, Elon wants to take SpaceX public at a valuation of 1,75 trillion after merging it with XAI. The valuation is roughly 100x revenue. Two details that I find interesting are:

  1. Elon wants to allocate 30% or more of the 75 bn offering to retail investors.
  2. The index providers, in this case Nasdaq will grant an exemption and potentially allow SpaceX to enter the Index already after two weeks instead of 1 year and are  waiving free float requirements
  3. In addition, I read that SpaceX weight in the Index could be up to 5x bigger than its free float would justify.

The game plan is pretty clear: Give as much as possible to Elon’s “price-insensitive” fanbase and then force the index funds to “fight” for the little free float available and allow the insiders an easy exit at the proposed nosebleed valuation. 

But what does that mean for index investors for the future ? 

As an index investor in the past, the big advantage was that you automatically caught the big winners rather early. 

Nvidia for instance entered the Nasdaq 100 in May 2001 at a share price of ~30-40 ca and a market cap of around 6bn USD. 

So a long term index investor participated fully in the 400-500x over the last 25 years. Same with Google, Amazon and all of the other big winners that drove past index gains. Even Meta IPOed “only” at a market cap of ~100 bn in 2012. That’s the reason why the Nasdaq100 returned around 16% p.a. for the last 20 years and making a lot of people very wealthy. 

SpaceX is the first member of the “new breed” of IPOs where most of  the value accretion basically happens outside the listed stock market in the private markets. As an Nasdaq Index investor you will be forced to allocate a significant part into this company at a much later stage and at a much higher price.

And SpaceX is only the first candidate of that new breed. OpenAI, Anthropic, Anduril, Stripe are other candidates that might go public at valuations at hundreds of billions or ven trillions.

It is very likely that Index investors will participate (if at all) at a very late stage of the success of these companies. The conclusion is relatively simple: The more such IPOs and “quick entries” happen, the higher is the risk that Index investors will not be able to earn the returns that they did in the past when these companies entered the indices much earlier. There are clearly other factors that influence returns as well but this one could become quite significant in 2026.

German Natural Gas storage / Renewables

In the big scheme of things this is a small topic but clearly personally relevant for me. Natural Gas is a very important source of energy in Germany. We need it for the industry, to generate electricity and to heat homes. Due to German weather, demand is much higher in Winter than in summer. Therefore, Germany has created significant Gas storage infrastructure that is able to store up to 3 months of peak WInter demand. I don’t need to stress that only a very small percentage of demand can be met with local resources.

The relevance of that storage became clear when the Russians first throttled the gas pipelines in 2021 and then Northstream II was blown up in 2022.

This led to panic buys of the then Green Ministry of economics in 2022 which in turn led to record high gas prices in 2022. 

Following those events, the German Government introduced some minimum requirements for gas storage plus incentives for utilities to buy natural gas in advance and compensate them if they have to sell it cheaper later on.

The new German Government under the the Economics Secretary Katharina Reiche (former employee of utility Eon and supposedly an Energy expert) however decided that those incentives are not needed anymore in 2025 and expected that “the market will solve this” and lower the costs for the Government (and tax payers/consumers). 

Fast forward to End of March and the market “solved” it in a way that despite a relatively mild winter, gas storage levels are at a record low of 20% as this chart shows:

Now as we all know, the supply of global LNG is pretty handicapped, as Qatar has shut down its facilities which took around 20% of global capacities off the market. Some of that seems to be now permanently damaged.

Although natural gas wholesale prices in Europe came down a little bit over the past few days, they are still 80-100% higher than end of last year or beginning of this year:

Of course, the incentive of the utilities to fill up gas reserves without any help right now is zero.

Back in 2022, Mr. Habeck started buying Natural Gas with Government money in the beginning of March when storage levels were at 30%. This time around, Ms Reiche is still only   “monitoring the situation”  4 weeks later at a much lower level of reserves.

With the global shortage of LNG, it has clearly not become easier and cheaper to fill up German storage levels. Since 2022, Europe is relying much more on US LNG imports as this chart shows:

But Mr. Trump would not be Mr. Trump if he would not already threaten Europe repeatedly with stopping LNG exports if Europeans do not behave the way he wants us to behave.

To top things up, Ms Reiche is planning to phase out subsidies for Renewables and also make life more difficult for battery energy storage according to some leaked documents and focus even more on gas fired infrastructure for electricity generation in the future.

So what does all of this mean ? In my opinion this means that energy prices might stay higher for longer and the risk of a “panic reserve buying” spike like in 2022 is increasing.

As the price of natural gas is also driving the price for electricity, everyone who uses electricity has some significant risk that these bills might rise significantly in the coming weeks/months.

Back in 2022, this led to a short lived boom of renewable energy stocks. Interestingly, so far this hasn’t happened. Here are the stock prices of the main German players which look very depressing:

Especially developers look quite ugly, as their “development pipelines” have been hit massively by oversupply, higher interest rates and generally more negative sentiment.

Interestingly, for many electricity clients in Germany, the bill has decreased this year as the Government has been taken over the cost for electricity transmission and is paying the TSOs directly (among them the former employer of Ms. Reiche).

Overall, the sentiment vs. renewables is really bad with a lot of especially the developers struggling to keep afloat.

To be honest, I have no idea what the future will look like for developers, but operators of renewable energy plants might have some “upside optionality” in this environment.

So mainly in order to hedge my personal electricity price exposure, I decided to buy a 1,5% position in a small German Solar PV operator called 7C Solarparken. /C Solarparken was already part of my 2022 “Freedom Energy” basket. They have decent exposure to potentially rising electricity prices and the stock is really cheap ~5x EV/EBITDA and 0,6x book value. They have very little exposure to development projects and generate tons of cash.

Structurally, they also will benefit from less renewables development activity going forward, as every new PV plant cannibalizes existing ones to a certain extent.

This is clearly not a long term growth play but rather a 6-12 month “hedge” in case our Government fuxxs up the refilling of the gas storage during the year, which I see increasingly probable.

Bonus soundtrack:

Who would fit better to my “Panic Journal” than Hamburg legend Udo Lindenberg and his “Panic Orchestra”. Here, an early song from him called “Andrea Doria”:

Udo Lindenberg – Andrea Doria (Video von 1973)

Visibility as a Creator/Writer on LLMs – A test and some thoughts

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Visibility on LLMs

Management summary:

This post does not offer any actionable investment content. Rather I wanted to find out if my blog is visible on the various LLMs and if I want to be visible. I would be very interested in how fellow “creators” think about this and how they approach this topic.

Visibility of Value and Opportunity on different LLMs

Just out of interest, I asked several LLMs about the 5 best Investment blogs for European stocks. The results were quite interesting.

Google Gemini for instance distinguishes significantly in which language one asks and which model you use. A German language prompt gives a very different answer (mostly German language Blogs) than an English prompt and “fast” mode gives very different results from “thinking” mode.

Here are the 5 top blogs in Fast mode for the German prompt: (“Welches sind die 5 besten Investment Blogs für Europäische Aktien, insbes. Nebenwerte ? “):

And here the results for the same prompt in “thinking Modus”:

There is some overlap and I am on both of the lists, which is great, but still interesting.

A few days earlier I tried a slightly different prompt (“Nenne mir bitte die 5 besten Investment Blogs die sich mit Europäischen Aktien beschäftigen. “)

And I got very different results:

What is also interesting is that Gemini doesn’t look for Substacks when I ask for blogs. Asking specifically for Substacks, gives once again different top 5 for the fast and thinking model, but the V&O Substack does not appear when asking for Substacks.

When I ask Gemini in English for blogs, I get the following result for “fast” mode:

In Thinking mode, this is the output:

So I show up in both, but the other 4 are different.

Overall it is quite interesting that asking in German language automatically selects mostly German blogs and how much the results differ from fast to thinking mode.

Of course, different LLMs give different answers. The very same German prompt from above  gives this result overview in ChatGPT:

The English prompt gives the following result:

ChatGPT interestingly does not care too much in which language you ask, the overlap is higher than for Gemini. But it has remembered my 10 factor Scoring model and without asking has somehow mixed that into the decision.

Claude interestingly doesn’t seem to know my blog at all. I have to say I am disappointed 😉

The LLMs know Value and Opportunity

So after putting out content for 15 years, Gemini and ChatGPT LLMs clearly know about my blog, but it is really interesting how differently they answer to the very same questions. Also that language plays such a role for the results is kind of interesting for me.

Interestingly, if I use the normal Google search, my blog is not visible at all, at least not on the first 10 pages, irrespective of what kind of searches I do. This mirrors  a little bit the traffic statistics form my WordPress overview where Google as a source for traffic more or les disappeared a few years ago. Only when I ask for a certain analysis, for instance Eurokai specifically on the Value & Opportunity blog, I see my blog in the results. Otherwise no chance.

I have to admit that I have also become quite lazy to add a lot of Keywords etc but in general, Google search as such seems not to be “my friend” anymore. Some years ago, especially the more general articles received significant traffic, even years after I wrote them, but that has gone totally away.

How to optimize for LLM visibility  ?

I feel very lucky that I don’t have to optimize for traffic, otherwise I could imagine that trying to optimize LLMs is not so easy. I have briefly researched the topic and it seems that for now, LLMs seem to emphasize a longer track record and credibility.

One of the nice things is that one can ask the LLm to explain. Google Gemini’s answer is quite flattering I have to admit:

If I wanted to make more advertising for my work, I would basically copy& paste that answer.

Of course, I also wanted to know why I don’t appear on Claude’s list. This is what Claude tells me:

Typically for an LLM, it apologizes. What I find interesting is that Claude indeed seems to start looking in high traffic locations and then doesn’t go much further.

Do you actually want to be visible to LLMs ?

One question one has to ask is of course as a writer & creator: Do you want to be (fully) visible to LLMs or not ?

Despite my visibility on Gemini and ChatGPT, the LLMs do not refer a lot of traffic back to the site. I can see Gemini with a little traffic and ChatGPT with no referrals at all. So they know about the blog, but they don’t refer a lot of people to the blog. Maybe the answers are already good enough if my content gets shown. Outside my Email list, most traffic still comes from Google search and TwiX.

If you want to monetize your content directly, it is clearly not good when LLMs can read your stuff and summarize it perfectly. I was for instance quite astonished when a TwiX user asked Grok to summarize my Biontech post in TwiX and Grok did so with a pretty decent summary.

On the other hand it seems that at least for Gemini and ChatGPT, you need to show them your content in order to get recognized. I guess a good compromise could be to show some of the content so that the AI can learn about what one writes but then keep newer stuff behind a paywall or so.

Another strategy would be, not to share anything on the web in order to protect one’s “intellectual property”. As for now, the LLMs don’t give a lot of traffic back, so why should you be visible at all ?

In my case, I am lucky that (so far) I can monetize my content very indirectly.

For me, the main payoff comes through constructive feedback and, every now and then a nice email from a reader or even better, some personal contact and someone says “I read your blogs for x years and really like it”.

My other goal is also“make the world a little bit of a better place” by maybe teaching some people how to “invest” instead of just “gambling” blindly and help them to hopefully better secure their financial future. For this goal, getting my content “indirectly” distributed through LLMs is clearly helpful.

If someone asks if xyz-Shitco is a good investment and somehow in Gemini’s neural net it identifies a  “red flag” that it has maybe learned through my posts, this could be a very powerful “amplifier”. But this is clearly hard to measure.

Summary:

For now, I am quite flattered, that 2 out of 3 LLMs find my content good enough to put me into the Top 5 European Small Cap blogs. That is clearly niceclearly a nice feedback. 

Most of all, I feel very lucky that I don’t have to directly monetize my content. I think this will be less straightforwardstraight forward than in the “search machine age”. There will be some solutions for sure but I guess “cause and effect” might be less linear than in the old times.

I would be very interested in how fellow “creators” think about this and how they approach this topic.

Some links 10/2016

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Fantastic write-up on Sony Corp From Govro at Wintergems

And a very deep dive into Nintendo from Asian Century Stocks 

Patient Capital with a very interesting write-up on Nu Bank (X Article)

The UBS Global Investment Returns Yearbook Summary includes some very interesting stuff 

The Hamilton Lane 2026 Private Market Report contains tons of interesting charts and data (registration required)

VC pioneer Paul Graham with an interesting essay on ….Swiss Watches

It seems that SpaceX might get some VERY preferential treatment from Nasdaq at its IPO

BioNTech: The Founders announced their exit – what’s next ?

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Disclaimer: This is not investment advise. PLEASE DO YOUR OWN RESEARCH !!!!

I wrote this post this morning (CEST) when the stock price was around 73-74 EUR. I then had to run some errands before being able to post and the stock price moved already significantly. All calculations etc. are based on a stock price of 73,50 EUR.

By coincidence, I just wrote about Biontech a few weeks ago. Luckily my summary back then was not to invest:

Now two things happened yesterday on March 10th, when they were supposed to talk about Q2 earnings:

  1. The two founders announced that they will leave by the end of 2026 in order to start a new company
  2. The share price dropped significantly after the announcement

This is the stock chart in Germany (in EUR):

After a low of around 68 EUR, the shares currently trade at 73-74 EUR at the time of writing.

Funnily enough, this is almost exactly the current net cash per share and even 10% below my “worst case” assumption:

Using my “old” scenario, the potential upside would now be obviously a lot higher.

But, and this is a BIG BUT: With the founders leaving, one of the main qualitative arguments became a lot weaker. This was my Pro & Con list back then:

We just don’t know who will run the company from next year onwards. Initially this was a big negative news for me.

What did the founders actually announce:

I haven’t listened to the call yet, so I stick to the slide from the results presentation from yesterday:

So Sahin and his wife will leave by the end of the year and basically take some (or most ?) of the mRNA technology in exchange for a minority stake into a new company. We do not know if they also get cash or not. I would assume not.

Normally, one sees such “deals” only after a Biotech company is taken over by a big Pharma company and a founder wands to make sure that early stage projects are not getting killed.

One such situation was the Actelion/Idorsia Special Situation I invested 9 years ago, where after the take-over of Actelion by Johnson & Johnson, the founder Clozel took the whole development department including the early stage pipeline into a new company called Idorsia which was then spun-off to shareholders.

Interestingly, Idorsia, even after 9 years didn’t do too well and trades significantly below the value right after the spin-off:

In the German press, there are some rumors that the founders have made that move because a sale of Biontech to a bigger Pharma company might be imminent, although officially the founders have said this is not the case.

What I find most striking is the issue that they haven’t announced a successor for the founders yet.

Without a potential sale of Biontech on the horizon, the founders could have just “hired” or promoted someone to CEO who takes care of commercializing the late stage pipeline and continue to do their research within Biontech.

I get the impression that maybe, after 18 years, the billionaire Strüngemann Brothers who put up the initial funding and still own 40% do not agree anymore with the founders who own around 15%. In some older articles, both the Strüngmanns and Sahin always made the point that they want to create a “full blown” BioPharma company that can play in the first league internationally.

At least Sahin and his wife now decided that they actually prefer to do research.

Another dicey issue is that the founders will basically negotiate the transfer of the mRNA technology with themselves as they want to close this before the end of the next quarter, maybe specifically before a new CEO is installed. My impression is that they are honest people and really interested in research, but it is of course not ideal if they negotiate with themselves.

Also the announcement that Biontech will only get a minority share seems to indicate that this time, Sahin and his wife want to have the full control which they currently don’t have.

It will be also interesting to see if and how many of Biontech’s R&D staff will follow them to the new company. 

What is the worth of a charismatic founder ?

Yesterday’s announcement is also an interesting datapoint regarding the question: What is the worth of a charismatic founder? In this case, for most shareholders, the announcement was clearly a big surprise.

The -20% clearly indicate that at least in the short term, investors think that the company is worth less without its founders.

So what about Biontech now ?

As I mentioned in the beginning, the share price is now around -25% lower than in January. On the other hand, without the founders, a lot of things could be more difficult, especially if a lot of people follow them to the new company..

As a compensation, the possibility of a take-over/sale of the company to a large international player has clearly increased, I would assume that in the case of a takeover, the pipeline value would be paid to a large extent by an acquirer.

I have asked various versions of LLMs who the most likely acquirer would be. The favorites were Merck (US), Bristol Myers (with which they partnered) and Roche. All of them could make use of Biotech’s pipeline and have the means to do the transaction.

I also think that once the mRNA deal is signed, a subsequent sale of the company could happen rather sooner than later.

New scenario:

My new downside case would be 80% of net cash which is a level that many loss making Biotech firms trade at.

My upside scenario would be the 144 EUR with the pipeline value from the last post.

If I use a 50/50 scenario this would translate into (-20%+100%)/2= +40%

That looks a lot better than in January. 

Of course anyone could add a lot of other cases but I like to keep it simple.

There is still the issue that we don’t have a “hard” deadline for a potential deal, but on the other hand, the year end deadline for their exit could be interpreted as a deadline for the Strüngmanns to find a buyer.

Playbook:

My assumption is that this situation doesn’t escalate totally between the founders and the Strüngmann brothers. One big warning sign and red flag would be, if the agreement for the new company would not be signed until the end of June. 

Summary:

In a nutshell, Biontech now looks much more like an interesting “Special situation” than in late January.

Yes, the founders will be gone by year end, but the stock is 25% cheaper and we now have a “soft deadline” for a potential M&A announcement.

My “back of the envelope” calculation indicates and expected average return of 40% for roughly one year which is attractive. I therefore allocate 1,5% of the portfolio into Biontech at current prices of 73,50 EUR/Share.

Bonus Soundtrack:

I imagine that the founders will play that Soundtrack if the walk into their new company in 2027: Jon Batiste – Freedom

Jon Batiste – FREEDOM

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