Germany considers a \u20ac5 billion KfW stake to block UniCredit’s hostile takeover of Commerzbank, as shares surge 52% and a May showdown looms.<\/p>\n
Germany\u2019s government is weighing a multibillion-euro intervention to block UniCredit\u2019s hostile advance on Commerzbank, as the Italian lender\u2019s formal exchange offer lands well below the market price. The political pushback has sent Commerzbank shares to fresh multiyear highs, while management prepares to unveil its own defence strategy.<\/p>\n
The 25% Barrier<\/p>\n
The federal government, which holds roughly 12% of Commerzbank through its bank rescue fund, is now exploring an increase to a blocking minority of 25% via the state-owned KfW. Such a move would require an estimated \u20ac5 billion outlay. Coalition sources describe the potential stake-building as a last-resort measure to fend off a hostile takeover of a systemically important institution.<\/p>\n
\u201cThis approach is completely inappropriate and unfair,\u201d government spokesman Steffen Hille said, with the finance ministry adding that a hostile takeover of a systemically relevant bank is \u201cnot acceptable.\u201d Labour union Verdi has echoed the sentiment, warning that only an independent Commerzbank can preserve its branch network and service to Germany\u2019s Mittelstand.<\/p>\n
UniCredit\u2019s Hidden Leverage<\/p>\n
UniCredit has already built a formidable position. Through Nomura swaps, the Milan-based lender secured access to an additional 5.56% of voting rights, giving it effective control of around 35% of shares. Financial investor Jefferies adds another 11.09% voting stake, held almost entirely via options and swaps.<\/p>\n
Should investors sell immediately? Or is it worth buying Commerzbank?<\/a><\/p>\n The formal offer values each Commerzbank share at 0.485 new UniCredit shares, equating to roughly \u20ac31 to \u20ac34 at the time of announcement \u2014 a significant discount to the current market price. UniCredit chief Andrea Orcel has labelled Commerzbank a \u201cpermanent underperformer,\u201d a characterisation that Commerzbank CEO Bettina Orlopp forcefully rejected, arguing the Italian bank misunderstands the German lender\u2019s business model and its importance to the country\u2019s industrial backbone.<\/p>\n Market Momentum<\/p>\n Investors have largely shrugged off the below-market bid. Commerzbank shares climbed 4% on Wednesday to \u20ac37.06, just shy of the 52-week high of \u20ac37.75. The stock has surged roughly 52% over the past twelve months, with the relative strength index signalling strong momentum. Over the past 30 days alone, the share price has gained 17.5%.<\/p>\n Analysts view the Italian offer as unattractive given the discount to the current trading level. UniCredit, meanwhile, is negotiating from a position of strength, having reported a record first-quarter profit of \u20ac3.2 billion and a return on equity of 26%.<\/p>\n