UniCredit Moves to Boost Commerzbank Stake

UniCredit, Italy’s second-largest lender, has launched an unsolicited bid to increase its stake in Commerzbank above 30%, according to multiple reports. This move aims to unlock an 18-month stalemate and push the German rival to accept merger talks. The surprise offer implies a value for Commerzbank of roughly €35 billion, ratcheting up pressure on the lender and the German government, which have both previously expressed strong opposition to a tie-up.

UniCredit currently holds a 26% equity stake in Commerzbank, along with an additional 4% through total return swap contracts. The bank plans to offer an exchange ratio of 0.485 shares of UniCredit per share of Commerzbank, implying a price of €30.8 per Commerzbank share, or a 4% premium on the German bank's closing price on March 13. Under German takeover laws, crossing the 30% ownership threshold mandates a full buyout offer.

The move puts UniCredit on a collision course with Commerzbank’s board and the German state, which bailed out the bank during the 2008 financial crisis and still holds more than 12% of its shares. The former German chancellor Olaf Scholz has called the Italian move “an unfriendly attack.” UniCredit CEO Andrea Orcel emphasized that the offer is designed to overcome the '30% cliff-edge' under German takeover law and foster constructive engagement with Commerzbank and its stakeholders.

Commerzbank, one of Germany's oldest banks founded in 1870, has about 40,000 employees across 40 countries. The bank is a significant lender to the Mittelstand—the small and medium-sized family-owned businesses that form the backbone of the German economy. UniCredit expects to launch the offer formally at the beginning of May, following a shareholder meeting where it will seek investor approval for the move.

Commerzbank CEO Bettina Orlopp criticized UniCredit's offer as 'very low' and expressed frustration over the lack of a specific plan from UniCredit regarding its vision for a tie-up. She emphasized the need for detailed information on efficiencies, costs, speed of integration, and organization to evaluate any potential deal.

The European Central Bank has been pushing for more banking consolidation, especially cross-border, to counter the growing presence of U.S. banks in Europe. However, this effort has met with widespread opposition from national governments seeking to retain influence over their banking sectors. UniCredit already has a sizeable presence in Germany through its HVB bank and believes a merger with Commerzbank would boost both the German banking market and broader European desires to build larger, stronger lenders.

According to Reuters, Boris Rhein, premier of the German state of Hesse, called on UniCredit to submit a concrete offer for Commerzbank. Rhein emphasized that Frankfurt's position as Europe's leading financial center must be strengthened. This call underscores the growing tension between UniCredit and German authorities over the proposed takeover.