Commerzbank held talks with UniCredit over potential deal
German bank hits back after Italian lender accused it of failing to engage
Italy’s UniCredit and Commerzbank held talks about a potential takeover in recent weeks, but the German lender rejected the approach saying a deal did not offer sufficient upside for investors.
Commerzbank on Tuesday disclosed that the two European lenders had held talks to explore a potential tie-up before UniCredit accused the German bank of failing to engage in discussions about a transaction.
The announcement is the first time either side has disclosed talks about a possible deal, 18 months after UniCredit first revealed its stakebuilding in Commerzbank.
UniCredit last month launched a €35bn takeover bid for Commerzbank, stepping up its drawn-out pursuit of the German lender in the face of fierce opposition from Berlin.
However, the Italian bank’s chief executive Andrea Orcel said it did not expect to gain control of Commerzbank through the offer, which came with a meagre 4 per cent premium at the time of the announcement.
“Several interactions took place in recent weeks — the last one shortly before the aforementioned publications by UniCredit — to constructively explore the fundamentals and potential of the takeover offer that UniCredit had presented to Commerzbank shareholders,” the German lender said on Tuesday.
The broadside from the German bank comes after UniCredit last week accused it of failing to engage in talks about a potential transaction, arguing in investor documents that its bid was triggered by Commerzbank’s “a priori refusal to engage”.
Commerzbank said that interactions between the two sides had “not demonstrated sufficient value upside potential for its shareholders” beyond the bank’s current strategy as a standalone entity.
It added that UniCredit had shown “no willingness” to offer Commerzbank shareholders a “necessary adequate premium”. “Commerzbank currently sees no possibility of an amicable solution,” it said.
The Italian bank has amassed a 29 per cent holding in Commerzbank through a combination of share purchases and derivative transactions. Crossing the 30 per cent threshold would have triggered a mandatory takeover offer under German law, which precipitated last month’s offer.
Commerzbank’s board and Berlin have both voiced their opposition to UniCredit’s overtures, with the government, which still holds more than 12 per cent of the German bank, stating a desire for Commerzbank to remain independent.
The Italian lender is currently seeking approval from its shareholders for a capital increase to help finance the takeover offer.
Commerzbank on Tuesday also argued that it could deliver improved returns for shareholders independently, without the risks associated with a cross-border merger.
It will publish upgraded financial targets alongside its quarterly results on May 8, in a move aimed at reinforcing its standalone strategy and fending off the bid.
“A significant part of the potential outlined by UniCredit is not based on a combination of the two institutions and can therefore also be realised by Commerzbank independently, without the significant execution risks associated with a transaction,” the German bank said.
Shares in UniCredit were trading 0.8 per cent lower in afternoon trading in Milan, while Commerzbank’s share price was down 0.3 per cent in Frankfurt.
Commerzbank said it “remains open to discussions and proposals that create concrete value for its shareholders and stakeholders”.
UniCredit did not immediately respond to a request for comment.