Commerzbank Rejects Takeover Proposal by UniCredit
Recently, Commerzbank, one of Germany’s leading financial institutions, declined a takeover proposal by UniCredit, intensifying its resistance to the cross-border approach. The proposal saw UniCredit, now the biggest shareholder in Commerzbank, offer to purchase Commerzbank stock, valuing the lender at nearly €39bn ($45.37bn). However, this valuation fell short of the bank’s market price, resulting in Commerzbank’s rejection of the offer.
Commerzbank’s Stance on the Proposal
On 18 May, Commerzbank released a statement in which its supervisory and management boards recommended that shareholders reject UniCredit’s exchange offer. The bank’s leadership argued that the offer did not accurately reflect Commerzbank’s fundamental value and posed significant risks.
Commerzbank, which has been against a merger for several months, called UniCredit’s approach vague and lacking an adequate premium. Until recently, it had not provided its final viewpoint or advice to shareholders on this matter.
Reasons for Rejection
According to the statement, Commerzbank believes that the offer’s implied value represents a significant discount compared to the bank’s long-term value creation potential and its current trading metrics. Moreover, since the offer’s announcement, Commerzbank’s shares have ended above the implied offer value on every trading day, as the bank pointed out.
The managing directors and supervisory board further stated that UniCredit was inaccurately assessing potential revenue declines, possible cost savings, restructuring expenses, and the time necessary to implement its proposed measures. Particularly, they highlighted the planned job cuts, the complexity of integrating IT systems, and revenue losses associated with overlaps in the Corporate Clients business.
Commerzbank’s Future Plans
Commerzbank CEO Bettina Orlopp said, “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.” She further noted that Commerzbank has a clear and successful strategy, which offers an attractive growth case to its shareholders. This serves as the benchmark.
Separately, Commerzbank recently announced plans to eliminate 3,000 jobs while setting stricter profit targets. This move is a part of its effort to maintain its position as a standalone lender amid the takeover attempt by UniCredit.
For more details, click Here.
