Activist fund Petrus Advisers is pressuring TeamViewer AG executives to end its frequently criticized sponsorship deals with football club Manchester United and the Mercedes Formula 1 racing team.
(Bloomberg) — Activist fund Petrus Advisers is pressuring TeamViewer AG executives to end its frequently criticized sponsorship deals with football club Manchester United and the Mercedes Formula 1 racing team.
Petrus, disclosing a stake of just below 3% in the German IT services company, called the sponsorships a sign of hubris and “appalling judgment” in a letter to Chief Executive Officer Oliver Steil and finance chief Michael Wilkins. Saying it had been advocating for months in private, Petrus warned it wouldn’t tolerate the company spending more than €70 million ($73 million) — about 1.4 times its net profit — on the sponsorships.
“You are not SAP, Oracle or Mercedes,” Petrus Managing Partner Klaus Umek and partner Till Hufnagel said in the letter dated Wednesday. “Yet, you do not seem to get it.”
TeamViewer, a remote working software business whose valuation soared during the coronavirus pandemic, is reportedly paying Manchester United £47.5 million ($57 million) annually until 2026 as a shirt sponsor. That makes it one of the costliest sponsorship deals for a European football club, which has drawn frequent criticism by analysts. TeamViewer is also expected to shell out millions of euros for a five-year contract with Mercedes Formula 1 racing team.
A spokesperson for TeamViewer said the company continuously assesses its need to invest in its brand and the visibility of its products against the company’s strategy as well as the macro-economic outlook. TeamViewer already had announced it wouldn’t prolong its Manchester United partnership beyond the initial term, and also has communicated its desire to look at amending its existing contract, according to the spokesperson.
Bleeding Millions
In August, Steil said he wouldn’t renew the Manchester United contract, a step Petrus thinks isn’t enough to fix the firm’s cost base.
“We demand that you stop bleeding millions and rapidly disengage from this mess,” Petrus said in the letter, which was reviewed by Bloomberg News. “We therefore demand that you enter professional exit discussions with a clear goal of a quick solution and that you do it immediately.”
Founded in 2005, TeamViewer offers remote computer access tools to customers in about 180 countries. The company plans to further expand in Europe, Asia and the US, including adding to its offerings to help large corporate customers connect mobile phones and tablets to machine sensors, smart farming equipment and wind turbines.
The deals with Manchester United and the F1 team were supposed to help build a global brand, but TeamViewer has struggled with large rivals entering the market and the work-from-home boom waning.
Once a rising star among German tech companies, with a market value topping €10 billion at its mid-2020 peak, TeamViewer’s appeal has faded over the past year and a half. Its shares have fallen 9.5% this year, giving it a market value of less than €2 billion.
TeamViewer’s March 2021 Manchester United deal triggered a profit warning shortly thereafter, with the firm citing a “significant increase in marketing expenditure.”
‘Even Ronaldo’
Analysts have frequently criticized the sponsorships as too costly for TeamViewer.
“TeamViewer (and the market) is still searching for a new base after drastically scaling back its mid-term ambitions a year ago,” analysts from Kepler Cheuvreux said in a recent note titled ‘When even Ronaldo cannot save you,” alluding to Manchester United’s striker.
In recent campaigns, Petrus has successfully pushed for higher takeover bids, most recently for an improved offer from Advent International and Centerbridge Partners for German real estate lender Aareal Bank AG. At Switzerland’s banking software firm Temenos AG. the fund is calling for a leadership change and strategic review including a potential sale
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