The German government's efforts to sell Commerzbank shares in a market placement, on the face of it, a simple task, were stalling. They had expected the...
FILE PHOTO: A sign for an ATM of Commerzbank is seen next to the headquarters of Deutsche Bank in FrankfurtFRANKFURT/LONDON - It was late on Tuesday evening in Europe and investors' suspicions were growing. The German government's efforts to sell Commerzbank shares in a market placement, on the face of it, a simple task, were stalling.
What's more, the lender had also quietly purchased another 4.5% on the open market, making UniCredit one of the biggest shareholders and opening the door to a potential deal with Commerzbank, which had rushed in Goldman as defence adviser. "It's unlikely UniCredit stumbled into this in the way it's being painted in the market, it's likely to be a lot better coordinated than at first glance and there is likely to be a complex underlying long-term strategy at play," said Mark Kelly, CEO of MKP Advisors.UniCredit declined to comment for this article. Officials for JPMorgan and Goldman Sachs declined to comment on their role in the transaction.
As the news broke on Wednesday, Orcel approached Commerzbank management with a view to explore potential talks about a merger, another source with knowledge of the situation told Reuters."From here, the ball is very much in UniCredit's court, and all eyes will be on whether it proceeds with increasing its stake in Commerzbank above 9.9%," said Filippo Alloatti, Head of Financials at Federated Hermes.
Germany is likely to hit pause on any further share sales after being taken off-guard, a government source said, adding that the bank and the government needed to assess what is now a new situation. Trade unionists too, fearing heavy job losses, also oppose a tie-up.Commerzbank shares closed up 16.6% at 14.69 euros in Frankfurt, while UniCredit's closed 0.2% higher in Milan.
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