(Bloomberg) -- Commerzbank AG shares fell after Germany said it won’t sell any more shares in the lender, prompting traders to scale back bets on a takeover by UniCredit SpA.
Berlin on late Friday announced that it will pause a planned disposal of its stake in Commerzbank, demonstrating its opposition to a takeover by the Italian rival. Shares of Germany’s second-largest lender declined as much as 6.2% on Monday, paring gains since UniCredit made a move on the rival to 17%.
The decision complicates plans by UniCredit Chief Executive Officer Andrea Orcel, who surprised markets this month by disclosing a 9% stake in Commerzbank and saying he was considering a full takeover. The prospect of the European Union’s largest cross-border bank deal since the financial crisis lifted the shares of both banks, with analysts broadly welcoming the idea.
Berlin, however, was apparently caught off-guard by UniCredit’s move. The government had planned to sell about 4.5% of Commerzbank to a range of institutional investors — a first step to return the lender to full private ownership more than 15 years after it was bailed out.
Instead, UniCredit snapped up the entire stake by outbidding rivals, and then disclosed that it had previously amassed more shares of Commerzbank quietly in the market. The lack of transparency irked German officials, a person familiar with the matter had said, asking not to be identified discussing government deliberations.
The government “will not, until further notice, sell any additional shares,” the agency responsible for sales said in a statement Friday. “This also includes sales related to any share buybacks”
Commerzbank “is a stable and profitable institute,” the German government said. “The bank’s strategy is geared toward independence.” Germany is still Commerzbank’s largest lender after the stake sale to UniCredit, owning about 12%.
It’s a position that will please the bank’s influential labor representatives, who have said they are “bitterly determined” to prevent a merger with UniCredit, warning that two-thirds of the jobs at Commerzbank could be cut in a takeover.
Still, the government’s announcement may not spark an immediate reaction from UniCredit. Orcel, a veteran dealmaker, has made repeatedly clear that he remains open-minded with regard to what happens next to its stake.
“We may go up, we may go down, and we may combine,” Orcel said in a Bloomberg TV interview earlier this month. “We are very patient.”
He has also said that at least some in Berlin were aware of his bank’s intentions and emphasized in recent days that he’s not interested in pursuing a hostile takeover, even as he seeks regulatory permission to build a stake of as much as 30%.
Germany’s resistance “might not stop UniCredit from approaching Commerzbank about a takeover,” RBC analyst Anke Reingen said in a note. “We do not think a deal is off the table forever, but any move is likely to be later than we had initially expected.”
(Updates shares in second paragraph, adds context throughout.)
©2024 Bloomberg L.P.
