Commerzbank urges shareholders not to accept UniCredit offer

With the UniCredit takeover bid set to close shortly, Commerzbank AG is appealing to its shareholders to remain loyal: "Do not accept UniCredit's offer and keep your investment in Commerzbank,” reads a letter to shareholders signed by Bettina Orlopp, the CEO of Germany's second-largest banking group, DPA reports, according to Agerpres.

The letter, which is to be sent to shareholders by post in the coming days and has been reviewed by DPA, states that UniCredit's proposal "does not offer a reasonable premium” for shareholders.

The target price for Commerzbank shares calculated by analysts is on average considerably higher than the offer price and the current share price, meaning that "the potential value of your shares is therefore not yet fully realized.”

UniCredit has not yet presented a robust plan based on the strengths of Commerzbank's business model. Moreover, the German government does not intend to sell its 12% stake, Bettina Orlopp claims.

In May, UniCredit launched a formal takeover bid, offering 0.485 of its own shares for each Commerzbank share. For most of the period, the implied value was below Commerzbank's market capitalization.

According to UniCredit, the offer was accepted for 12.51% of Commerzbank's shares during the standard takeover period, which is why it was extended until July 3. This would give UniCredit, which already holds a 26.77% stake, a combined holding of almost 40% of Commerzbank.

In the letter, Commerzbank reiterated its argument: More than 500,000 retail investors and several hundred major investors had bid for slightly more than 1% of the shares by the end of the acceptance period. "So far, the acceptance rate among our shareholders speaks for itself,” explained Bettina Orlopp.

For two years, Commerzbank has resisted what it described as UniCredit's "hostile” approach and accused the Milan-based bank of artificially inflating its position in the German banking group.

Already active in Germany through its subsidiary HypoVereinsbank, UniCredit says a merger could generate billions of euros in cost savings, including through the layoffs of thousands of employees.

• EU Competition Commissioner Urges EU Countries to Support Cross-Border Bank Mergers

EU Competition Commissioner Teresa Ribera urged EU member states this month to support cross-border bank mergers to help complete the single market. The call came a day after Germany rejected a takeover bid by Italian bank UniCredit for German rival Commerzbank, according to Reuters.

Commissioner Ribera's comments were echoed by other EU policymakers who have recently renewed calls for cross-border bank mergers as a solution to the multi-trillion euro investment needed to finance the bloc's green and digital transformation.

Plans for a full banking union are stalling, with bankers and supervisors blaming the lack of a common deposit guarantee scheme for eurozone depositors as the biggest obstacle to a banking union.

"Completing the single market remains one of the most urgent priorities for Europe's competitiveness. Cross-border mergers of our major European banks would help in this direction. There is an urgent need for this," Ribera said, adding: "Member states should welcome these transactions for the common good."

Ribera criticized countries that call for pan-European champions but refuse to take the necessary steps to support such goals, saying: "Europe cannot simultaneously claim that it needs globally competitive firms and refuse to examine whether its analytical models adequately reflect the realities of global competition, technological transformation and investment needs.”