End of Power Struggle at Heckler & Koch: BGH Ruling Confirms CDE’s Majority Stake
The long-standing power struggle between two major shareholders of Heckler & Koch (H&K), a leading German manufacturer of small arms, has come to an end. The Federal Court of Justice (BGH) has dismissed an appeal (case reference XI ZR 8/24) filed by former majority shareholder Andreas Heeschen.
Heeschen’s appeal aimed to maintain his influence in H&K. However, the BGH’s ruling upholds a decision by the Frankfurt Higher Regional Court, which ruled that the Luxembourg-based financial holding company CDE holds more than 80% of the voting rights, relegating Heeschen to a minor role.
H&K welcomed the ruling, stating that it provides legal clarity and resolves an outstanding legal issue. CDE also hailed the decision: "This confirms our position and ensures the legal certainty necessary for the company’s stable and sustainable development."
The power struggle between CDE and Heeschen had led to an abrupt halt of a shareholder meeting last summer. At the time, the Chairman of the Supervisory Board, Rainer Runte, decided not to allow the disputed share package to be voted on due to the unresolved legal question.
With Heeschen unexpectedly failing to register another share package, less than 50% of the share capital was represented at the meeting, forcing an abrupt end to the proceedings, an unusual occurrence for such gatherings. The BGH’s decision eliminates such uncertainties for H&K moving forward.
H&K is Germany’s largest manufacturer of small arms, including assault rifles, machine guns, pistols, and grenade launchers. With over 1,100 employees, the company primarily supplies the German Armed Forces (Bundeswehr).
Since Russia’s invasion of Ukraine, demand for weapons has surged, boosting the business of the Black Forest-based company. H&K’s competitors include Haenel (Germany), Beretta (Italy), Sig Sauer (USA), FN Herstal (Belgium), and CZG (Czech Republic), which acquired the American firearms company Colt in 2021.
Chronology of Events
- 2010: Heeschen pledges a large stake in H&K to CDE as collateral.
- 2014: CDE claims a majority stake in H&K based on the pledged shares.
- 2019: Heeschen contests the validity of CDE’s claim.
- July 2023: Frankfurt Higher Regional Court rules in favor of CDE.
- November 2023: BGH dismisses Heeschen’s appeal.
Implications of the BGH Ruling
- CDE now holds a clear majority stake in H&K, effectively ending the power struggle with Heeschen.
- H&K gains legal clarity and can move forward with its business without uncertainties related to the shareholding structure.
- The ruling provides stability and predictability for investors and stakeholders.
Market Impact
- H&K shares are expected to react positively to the news, as the removal of legal uncertainties will boost investor confidence.
- The ruling may also strengthen H&K’s position in the highly competitive global arms market, as potential customers see the company as a stable and reliable partner.
