Italy’s UniCredit cranked up the pressure on Commerzbank to accept merger talks on Monday with a low-ball bid to raise its stake in the German lender above 30%.
The modest premium and persistent German opposition mean the bid is unlikely to unlock an 18-month stalemate, but investors said UniCredit CEO Andrea Orcel was using market turmoil caused by war in the Middle East to gain more freedom to act later.
“Our message to Commerzbank today is: it is now time to talk,” Orcel told an analyst call.
Commerzbank said UniCredit’s near 35 billion euro ($40 billion) proposal lacked key terms needed as a basis for discussions as well as any premium for shareholders.
“We are convinced of the strength … of our strategy, which focuses on independence,” Commerzbank CEO Bettina Orlopp said.
The government, which owns 12.7% of Commerzbank, reiterated a hostile takeover would be unacceptable.
But Commerzbank shareholder Union Investment renewed calls for it to engage in talks with Orcel, a veteran dealmaker who has led UniCredit to build stakes in various rivals since starting as CEO in 2021.
Orcel has so far failed to clinch a deal, focusing instead on rewarding investors who have driven a near eight-fold increase in UniCredit’s share price in the past five years.
GERMAN TAKEOVER LAWS
UniCredit first invested in Commerzbank in September 2024, gradually increasing the stake but refusing to launch a full bid as long as German takeover rules applied mandating a cash offer with a pre-set minimum price.
Such rules ceased to apply on February 22, six months after UniCredit last bought Commerzbank shares.
UniCredit said it now wanted to also work around an obligation to launch a full buyout offer when crossing the 30% ownership threshold.
The low-ball bid should lift its holding only slightly above 30%, UniCredit said, and leave it free to buy Commerzbank shares on the market once the offer is completed.
It expects that to happen in the first half of 2027, after the necessary approvals, mainly from the European Central Bank.
Jerome Legras, head of research at Axiom Alternative Investments, which actively trades equity and credit of both UniCredit and Commerzbank, described the bid as “technical”.
“Smart timing from Orcel, when politicians are more focused on war, oil prices and inflation,” said Legras.
Italian broadcaster MFE last year used a similar template with Germany’s ProSiebenSat.1.
Commerzbank shares rose 8.8% on Monday, having lost more than UniCredit’s since the start of the war.
“This seems to be an astute move, providing UniCredit with additional flexibility going forward,” Citi analysts said, adding “major obstacles” remained for a full takeover.
UniCredit owns 26% of Commerzbank – from which it pocketed 378 million euros in profits last year – and another 4% through swap contracts.
UNICREDIT AIMS TO OVERCOME MERGER OPPOSITION
Orcel said UniCredit wanted to engage in discussions with German politicians and was open to offering terms that could bring everyone on board.
“We want to very openly create consensus,” he said.
Germany has had no contacts with UniCredit over Commerzbank in recent weeks, a government source told Reuters.
To counter the growing U.S. presence in European banking, the ECB is pushing for more consolidation, especially cross-border. But that effort has clashed with national governments’ resolve to retain influence over lenders.
UniCredit already has a sizeable presence in Germany through its HVB bank and the cost-cutting that has made HVB much more profitable than Commerzbank has fuelled concerns among unions and politicians about job losses.
The premier of the German state of Hesse, home to Commerzbank, said on Monday UniCredit’s offer would be assessed “diligently and without prejudice”, adding that Frankfurt’s position as Europe’s leading financial centre must be strengthened.
Italy has said in the past it would fight any attempts by UniCredit to shift the group’s headquarters to Germany.
Under German rules, the markets authority will determine the price of the offer, UniCredit said, adding it expected it to be set at 0.485 of a UniCredit share for each Commerzbank share.
That would imply 30.8 euros per Commerzbank share, or a 4% premium on the German bank’s closing price on March 13.
($1 = 0.8744 euros)
(Reporting by Valentina Za in Milan, Ludwig Burger; Tom Sims and Alexander Huebner in Frankfurt)
