UniCredit’s Commerzbank Takeover Faces Major Hurdles With German State Stake
Challenges and Implications of UniCredit's Takeover Attempt
Structural Barriers to Taking Commerzbank Private
BERLIN, June 22 (Reuters) - Any plans by UniCredit to take Commerzbank private would be very difficult to implement under the German lender's current structure, as a delisting or squeeze-out of shareholders is hardly possible while Germany retains its stake, government sources told Reuters on Monday.
Concerns Over Business Operations
"UniCredit management's current plans are not viable, particularly with regard to business with small and medium-sized companies," a government source said.
Progress and Resistance in the Takeover Bid
UniCredit on Friday reported an uptick in Commerzbank shares tendered in its takeover bid, while the German bank once again called on investors to reject the offer, prolonging a months-long battle between the two lenders.
Mechanics of a Squeeze-Out in Germany
In a squeeze-out, the remaining shareholders are forced out of the company in exchange for mandatory compensation. In Germany, this is possible after a takeover if control of at least 90% of the shares is ensured.
After the squeeze-out, the sole owner can then govern the company more easily.
Alternative: Delisting from the Stock Exchange
However, a company can also be taken off the stock exchange at any time by a management board resolution. In that case, minority shareholders can remain in the company, but can no longer trade their shares on the stock exchange.
German Government's Position and Broader Implications
The German government will continue to act in the interests of Commerzbank's employees, Germany's Mittelstand and Frankfurt as a financial centre, the sources said.
European Banking Union and Takeover Policy
Although the German government will continue to push ahead with the European banking union, that does not mean that every takeover is welcome without restriction, the sources said.
Rejection of Aggressive Approaches
"We firmly reject aggressive approaches," a source told Reuters.
(Reporting by Christian Kraemer and Maria Martinez, editing by Thomas Seythal)
