What happens after UniCredit’s takeover offer for Commerzbank ends on Tuesday

By Valentina Za

MILAN, June 16 (Reuters) – UniCredit’s €40 billion buyout offer for Commerzbank concludes on Tuesday. 

Here are key takeaways from the process:

WHAT NEXT? 

UniCredit said that shares tendered under its Commerzbank bid stood at 12.41% at the usual 1200 GMT cut-off on Tuesday.

The final outcome of the bid, including shares tendered up until midnight Frankfurt time (2200 GMT) on Tuesday, will be published on June 19.

While the offer officially ends on June 16, investors have an additional two weeks between June 20 and July 3 to tender. The terms, however, will not change and there will be no further interim disclosures about the take-up. The final outcome will be released on July 8. 

WHERE DO WE STAND?

The 12.41% take-up of Commerzbank’s capital gives UniCredit an overall holding of 42.4%, including a 26.77% equity stake it had previously built and another 3.22% in share-settled derivatives. UniCredit holds 13.19% of Commerzbank in cash-settled derivatives. On Tuesday, the German government reiterated its opposition to UniCredit’s plans and officially rejected its offer.

WHAT WILL UNICREDIT DO?

UniCredit has said the goal of its voluntary buyout offer was to lift its Commerzbank stake above Germany’s 30% mandatory bid threshold – allowing it to buy more Commerzbank shares on the market next year once the process concludes.

The European Central Bank’s authorisation is necessary for the process to conclude and it is not expected before the third quarter.

UniCredit has said it wants to avoid a situation where it is declared in control of Commerzbank with less than 50% plus one share, because accounting rules for minority stakes would knock 280 basis points off its core capital ratio, instead of 200 basis points for majority ownership. 

To prevent such a scenario the Italian bank could use the cash-settled derivatives to lower its stake. If the swap counterparty agrees, it could also amend those contracts to share-settled swaps and reach majority ownership.

WHAT’S IN STORE FOR COMMERZBANK? 

UniCredit has said that even if it gained majority ownership it would need a couple of years to introduce changes at Commerzbank as a standalone company to facilitate its integration with UniCredit’s German unit HVB.

It has not made clear how it would combine the two groups and whether the new bank would be based in Frankfurt where Commerzbank is headquartered or Munich where HVB is based.

UniCredit has hinted at a management reshuffle at Commerzbank by saying it could get enough votes at shareholder meetings to appoint all investor representatives on the supervisory board that names the management. A 12% stake the German government acquired rescuing Commerzbank during the global financial crisis now gives it representation on the bank’s supervisory board.

WILL COMMERZBANK BECOME ITALIAN OR UNICREDIT GERMAN? 

Commerzbank CEO Bettina Orlopp has repeatedly said she is open to discussing a deal provided there is a higher premium and guarantees for the business model, which Orcel has plans to change. She also said the structure of the combined entity should reflect the fact that Germany is the main market.

UniCredit has ruled out moving the group’s head offices to Germany, though Italian authorities are concerned CEO Andrea Orcel could agree to such a move to soften German opposition. 

(Reporting by Valentina ZaEditing by Tomasz Janowski)