UniCredit secures 17.6% stake in Commerzbank in hostile takeover bid

Italy’s UniCredit launched a US$40.6 billion bid to gain control of Germany’s Commerzbank and cement its status as a European banking heavyweight. (EPA Images pic)

ROME: Italy’s UniCredit said Wednesday it had secured an additional 17.6% stake in Germany’s Commerzbank as part of its hostile and highly political takeover bid to create a European giant.

UniCredit said in a statement that “shares representing 17.60% of Commerzbank’s outstanding share capital have been tendered, well ahead of original expectations”.

UniCredit said that this added up to 49.65% of Commerzbank voting rights, taking into account its directly held 26.77% stake and different financial instruments.

“The completion of the tender offer periods represents a further step in the execution of UniCredit’s strategic investment in Commerzbank,” UniCredit, Italy’s second biggest lender, said.

The Milan-based bank launched its bid, valued at €35 billion (US$40.6 billion), in early May to gain control of its German rival and cement its status as a European heavyweight.

The offer price has been widely seen as too low and marks the latest move in UniCredit’s relentless pursuit of Commerzbank that has sparked fury from the lender and top German politicians.

Chancellor Friedrich Merz said in May the bid was destroying “trust” in Germany’s second-largest private bank.

If the offer succeeds and is approved by the European Central Bank, it should mainly allow UniCredit to gradually increase its stake in Commerzbank.

In particular, UniCredit is proposing to cut back Commerzbank’s international network, deemed too complex and inefficient, and refocus the bank on its activities in Germany.