Commerzbank formally rejects UniCredit takeover offer as risky and undervalued
Commerzbank's Response to UniCredit's Takeover Bid
By Tom Sims and Alexander Hübner
Background of the Takeover Attempt
FRANKFURT, May 18 (Reuters) - Commerzbank on Monday formally rejected an offer by Italy's UniCredit to buy the German lender, digging in its heels in its months-long resistance to the cross-border takeover attempt.
UniCredit has become Commerzbank's largest shareholder and earlier this month made an unsolicited offer to buy Commerzbank shares in a deal that values the bank at nearly 39 billion euros ($45.37 billion), below its market price.
Commerzbank's Official Recommendation
Commerzbank's supervisory and management boards "recommend that shareholders not accept UniCredit's exchange offer," the bank said in a summary of a 137-page analysis of the deal.
It said that the offer "does not reflect the fundamental value of Commerzbank" and that it was "vague and entails considerable risks".
Criticism from Executives and Stakeholders
Commerzbank executives - along with Germany's government and bank employees - have long criticised the tie-up attempt as hostile, recently calling UniCredit's offer "vague and coercive" with "quasi-nil premium".
But until Monday, management had held out on giving a final opinion and recommendation to shareholders.
"UniCredit’s takeover offer does not offer an adequate premium to our shareholders. What is described as a combination is in fact a restructuring proposal that would massively impact our proven and profitable business model,” said Commerzbank CEO Bettina Orlopp.
Implications and Reactions
The opposition is likely to further drag out the battle for control of one of Germany's top banks that started in 2024 when UniCredit began amassing its stake in a competitor that has grown close to 30%.
It sets the stage for a tense event on Wednesday when Commerzbank convenes its annual shareholder meeting.
UniCredit's Response
In a brief statement on Monday, UniCredit said it fundamentally disagreed with many of Commerzbank's statements, calling them "unfounded or unsupported", and that it would respond with more detail "in due course".
UniCredit's CEO Andrea Orcel has argued Commerzbank has not been living up to its potential and that Europe would benefit from bigger banks in a world of chaotic geopolitics.
Commerzbank's "current trajectory will put at risk its survival in the medium term," Orcel said last month.
Risks and Potential Impact
Commerzbank said in its analysis that a takeover by UniCredit could result in up to 11,000 full-time job cuts.
It also warned that investors who accepted the offer exposed themselves to UniCredit business risks in Russia and its large Italian government bond holdings.
Market Context
($1 = 0.8596 euros)
(Reporting by Tom Sims, Editing by Linda Pasquini, Kirsten Donovan and Tomasz Janowski)
