A contested bank deal has exposed weaknesses in Germany’s takeover framework, raising fresh concerns about shareholder protection and strategic ownership.
Commerzbank Supervisory Board Chairman Jens Weidmann has called for a review of Germany’s takeover rules after Italy’s UniCredit was able to gain control of the bank without, in his view, offering shareholders an adequate premium.
In comments to Sueddeutsche Zeitung, he said that UniCredit’s approach raises questions: the bank secured a majority of voting rights even though its offer was financially unattractive to Commerzbank shareholders.
How many Commerzbank shares were tendered to UniCredit
According to Jens Weidmann, UniCredit could have sought roughly 73% of Commerzbank shares eligible to be tendered under the offer. However, less than 18% of the shares were tendered.
Institutional and retail investors accounted for less than 3 percentage points of that amount. The remaining shares came from banks affiliated with UniCredit.
This allowed UniCredit to achieve a majority through a financially unattractive offer without paying an appropriate control premium. This raises questions about Germany’s takeover legislation, which lawmakers may wish to examine.
– Jens Weidmann
The offer period has already ended, but the transaction has not yet been fully settled. UniCredit must obtain regulatory approvals before it can take ownership of the shares tendered under the offer.
UniCredit has accumulated a 48% stake
In July, Commerzbank’s resistance to a potential takeover weakened as UniCredit gradually increased its stake to 48%. Such a holding allows the Italian bank to determine the outcome of shareholder resolutions.
Jens Weidmann also believes that the German government should not yet sell its stake in Commerzbank. The state acquired the holding as part of measures to rescue the bank during the global financial crisis.
The stake was part of a rescue measure, so the federal government must eventually exit the capital. But at the current stage, it makes sense for the government to remain a shareholder in order to actively represent Germany’s interests as a place to do business.
– Jens Weidmann
The discussion surrounding the Commerzbank-UniCredit deal may increase scrutiny of shareholder protection mechanisms and the rules for gaining control of strategically important German companies.