German government rejects Unicredit’s bid for Commerzbank

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• The German government has rejected the takeover bid by Italy’s Unicredit for Commerzbank.
• Berlin criticizes the offered price as insufficient and supports Commerzbank’s independence.
• The takeover battle between the two banks has recently intensified significantly and is now also drawing the attention of financial regulators.

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The German government has rejected the ongoing takeover bid by Italy’s Unicredit for Commerzbank. On the one hand, the offered price is deemed too low, and on the other, Commerzbank is to remain independent.

“Accepting the offer was out of the question from an economic standpoint, as the takeover bid does not include an appropriate premium on the current price of Commerzbank shares,” the Federal Finance Agency announced on Tuesday in Frankfurt. At the same time, the federal government, which holds approximately 12 percent of the shares as Commerzbank’s second-largest shareholder, once again expressed its fundamental opposition to a takeover of Germany’s second-largest private bank by Unicredit.

It stated that it supports Commerzbank’s strategy of independence and rejects Unicredit’s “aggressive approach.” “Commerzbank AG plays an important role in financing the German economy and German small and medium-sized enterprises. As a major employer, it is also central to Frankfurt as a financial hub. Both of these factors must be safeguarded in the future.”

Unicredit submitted a voluntary offer for Commerzbank in May and is offering its own shares in exchange. According to the latest figures, the Milan-based bank has received offers for around 11 percent of all Commerzbank shares. This would increase Unicredit’s stake to approximately 38 percent on a pro-rata basis; in addition, it has secured more than three percent of Commerzbank shares through call options and holds other financial instruments.

The offer period runs until this Tuesday but is expected to be extended until July 3.

Takeover battle turns into a mudslinging match

The takeover battle between Commerzbank and Unicredit has recently escalated. Unicredit threatened Commerzbank with a replacement of the supervisory board and executive board should it gain sufficient shareholder support at the annual general meeting.

Commerzbank, in turn, sees Unicredit’s disclosures as a sham and has involved the financial regulator Bafin. It criticizes that the tendered shares primarily come from banks with which Unicredit conducts business via financial instruments, and not from independent shareholders.

For such shareholders, Unicredit’s offer—which is below Commerzbank’s current share price—would be a losing proposition. Unicredit has repeatedly rejected the criticism.