Germany formally rejects UniCredit's Commerzbank offer
Government Response and Market Implications
By Tom Sims and Valentina Za
Official Rejection and Rationale
FRANKFURT/MILAN, June 16 (Reuters) - Germany has officially rejected UniCredit's offer for Commerzbank shares, the country's finance agency said on Tuesday, citing a low price and concerns about what it called the Italian bank's aggressive approach.
UniCredit's initial offer period for Commerzbank shares is winding down, with both banks digging in their heels in the months-long battle for control of one of Germany's most important lenders.
Government Stake and Strategic Concerns
The German government holds a 12% stake in Commerzbank acquired in the wake of the 2008 global financial crisis and has long objected to UniCredit's campaign for a tie-up.
"Accepting the offer was already not an option from a financial point of view, as it does not include an appropriate premium on the current share price of Commerzbank’s shares," the agency said.
Potential for UniCredit Control
Despite Berlin's position, UniCredit could still win control of the German bank, but the government's stake gives it seats on Commerzbank's supervisory board, which appoints management and helps oversee its strategy.
Support for Commerzbank's Independence
The agency, which manages the government's holdings, also said that it supported Commerzbank's independence, and noted that the bank played a critical role in financing medium-sized Mittelstand companies and was an integral player in Frankfurt, the nation's financial hub.
"Both must continue to be ensured in the future," it said.
Legal and Market Reactions
Market Manipulation Investigation
Separately, Frankfurt prosecutors on Tuesday confirmed that they had begun a preliminary investigation into possible market manipulation related to the offer, without providing details.
It follows a criminal complaint filed by Commerzbank's workers' council that reached prosecutors on Sunday. The employee group had communicated to staff that they would file the complaint against unspecified persons amid questions about UniCredit's acquisition of Commerzbank shares at a below-market rate.
UniCredit's Response
UniCredit said in a statement that it was aware of the matter and that the prosecutors' response was "in line with protocol when such complaints are filed".
Share Price Movements and Offer Details
Recent Share Price Activity
In Tuesday's trading, Commerzbank shares slipped below the price implied by UniCredit's buyout offer, after trading consistently above that level since the bid was launched and rendering UniCredit's offer relatively unattractive.
Offer Terms and Timeline
Shares in Commerzbank were trading at €36.53 by 0812 GMT, while those of UniCredit were at €76.97. With an exchange ratio of 0.485 new UniCredit shares for each Commerzbank share tendered, the Italian bank's bid values Commerzbank at €37.33 a share.
The offer ends on Tuesday but will extend for a further 15 days from June 20.
(Reporting by Tom Sims and Valentina Za, Editing by Friederike Heine and Tomasz Janowski)
