The German bank says no to a €39B bid, citing low valuation and severe risk to jobs.
Commerzbank AG’s board on Monday officially rejected UniCredit Bank SpA’s nearly €39 billion ($45.4 billion) acquisition offer. In a 137-page assessment, the Frankfurt-based bank said the Milanese lender’s offer “entails considerable risks,” including lingering Russia exposure that could be a net “negative.”
At Commerzbank’s annual shareholder meeting on Wednesday, employees voiced support for the bank’s stance, holding up signs with anti-M&A slogans, including “UniCredit Go Away!” CEO Bettina Orlopp drew applause after she described UniCredit’s offer as “an attempt to take over Commerzbank at a price that does not properly reflect the fundamental value and potential of our bank.”
Orlopp’s speech in Wiesbaden, Germany, marks a decisive escalation in a months-long standoff over the future of one of Germany’s most politically sensitive companies, due in part to its relationship with Russia. UniCredit steadily built a stake in Commerzbank over the past two years, starting with a 28% chunk. It has since increased that stake to 38.87%, the Wall Street Journal reported.
UniCredit’s nearly €39 billion non-cash offer is structured as a share swap of 0.485 UniCredit shares for each share of Germany’s second-largest listed bank. Commerzbank executives said in a statement that UniCredit’s takeover “offer does not offer an adequate premium to our shareholders.”
Germany’s federal government holds a 12.7% stake in Commerzbank and reportedly is considering raising that to 25%, a move that would grant Berlin veto power. So far, it opposes any “hostile, aggressive takeover,” citing Commerzbank’s importance to the country’s financial system.
UniCredit, for its part, pushed back sharply this week. In a statement to Reuters, the bank said it disagreed with Commerzbank’s assessment and characterized parts of the analysis as “unfounded or unsupported.” UniCredit CEO Andrea Orcel, a former Goldman Sachs, Merrill Lynch, and UBS investment banker, said UniCredit would respond in more detail “in due course.”
While Orcel has argued that Commerzbank has underperformed under Orlopp’s leadership, the resistance from Frankfurt and Berlin highlights the limited appetite for sector consolidation. Commerzbank’s analysis warns that a takeover could lead to as many as 11,000 job cuts.
Commerzbank shareholders are in the midst of an acceptance period, which began May 5 and runs until July 3. UniCredit, which is required to publish weekly so-called acceptance level updates during the acceptance period, says only 0.0059% of Commerzbank shares have so far been tendered under the offer as of May 12.
