The Italian banking group announces it has successfully acquired a 9% stake in Germany's second-largest bank, Commerzbank. The deal marks the first step of the German government towards reducing its holdings in the bank.
ADVERTISEMENTShares of Commerzbank, Germany's second-largest bank, surged 17% following news that the Italian lender UniCredit had acquired a 9% stake in the bank on Wednesday.
The acquisition price was €13.20 per share, significantly higher than Commerzbank’s market price of €12.60 at the close on Tuesday.
The bank's shares soared 20%, reaching a peak of €15.22 during the day, before pulling back to close at €14.69. The price reaction indicates that investors welcomed the deal and remained optimistic about the stake acquisition.
UniCredit has a market capitalisation of €59.5bn, while Commerzbank is valued at €17.4bn as of market close on Wednesday.
Berlin takes first step to reduce its stake in Commerzbank
The acquisition marks the first step by the German government towards reducing its holdings in Commerzbank, following its announcement made on 7 September.
The German government had held 16.49% of Commerzbank's shares since it injected €18.2bn to rescue the bank during the 2008 global financial crisis.
The deal has reduced Berlin's stake to 12%, but it remains the largest shareholder in Commerzbank. The government also noted that Commerzbank has been profitable since 2021 and that "around €13.15bn has been repaid to date".
In a statement on Tuesday, Commerzbank confirmed that CEO Manfred Knof will not be seeking an extension to his contract when it ends at the end of 2025. That news came just one week after the German government announced its plan to reduce its stake.
UniCredit may pursue a full takeover
In a separate statement, UniCredit said: "4.49% has been acquired through an accelerated book-building offering on behalf of the Federal Republic of Germany, in line with its intention to reduce its stake in Commerzbank AG. The remainder of the stake has been acquired through market activity."
However, UniCredit's ambitions do not stop there, as it also stated: "To maintain flexibility, UniCredit will submit regulatory filings for authorisation to potentially exceed 9.9% of Commerzbank if and when necessary."
UniCredit, which acquired HypoVereinsbank in 2005, has been expanding its presence in Germany. Analysts view the bank's ambition to fully acquire Commerzbank as a move to create a German banking powerhouse.
However, German labour unions have raised concerns about the deal, with one union highlighting that financial decisions significantly impact the country's economy and domestic jobs.
In July, UniCredit announced the acquisition of Belgian digital bank Aion, a provider of cloud-based banking services, for €370m. In October last year, the bank and Alpha Bank announced a merger of their subsidiaries in Romania.
European bank M&A set to enhance global competitiveness
European big banks have been engaged in a race of mergers and acquisitions this year as major lenders aim to consolidate their positions in European markets.
BBVA is in a hostile bid for the Spanish rival Banco Sabadell, despite the ongoing stalemate in the process. BNP Paribas was in talks to buy the investment arm of French insurer AXA in August.
ADVERTISEMENTThis trend has been supported by pro-business leaders, such as former French President Emmanuel Macron, who has voiced support for the Capital Markets Union (CMU).
The CMU refers to a framework established by the European Union to strengthen the financial stability of its banking sector and mitigate the risks of financial crises.
European banking M&A activity is also favoured by EU lawmakers, as it is expected to help the single market enhance its global competitiveness.
UniCredit CEO Andrea Orcel told Bloomberg that Europe needs banks with market capitalisations exceeding $100bn (€91bn) to compete with those in the US and China.
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