UniCredit is reportedly considering several options to sweeten its all-share takeover offer for Commerzbank, according to a report in the Italian daily Il Messaggero. These considerations come as UniCredit seeks to increase its stake in the German bank. UniCredit is a pan-European commercial bank headquartered in Milan. Commerzbank is a major German bank providing a range of financial services to individuals, small and medium-sized businesses, and corporate clients.
The report outlined three potential strategies UniCredit might pursue. One option involves increasing the swap ratio to 0.50-0.52 UniCredit shares per Commerzbank share, coupled with a 20%-30% cash component. This would entail an outlay of between 8 billion and 12 billion euros and a premium of 10%-15%. Alternatively, UniCredit may consider paying 40%-50% of the total consideration in cash, potentially raising the premium to 15%-20%, the paper added.
A third approach would involve offering Commerzbank shareholders a choice between a larger cash component or a larger share component, possibly with a price floor, for a premium of at least 15%. UniCredit CEO Andrea Orcel had previously stated the bank was open to improving the bid if discussions with Commerzbank revealed a shared strategic vision. UniCredit announced a 35 billion euro bid to raise its Commerzbank stake, which currently sits just below 30%.
UniCredit anticipates that the current bid’s low premium may limit take-up, allowing it to increase its stake just above the 30% mandatory takeover threshold. This would allow the firm to freely purchase Commerzbank shares on the open market in the future. Germany’s financial regulator is expected to set the bid’s exchange ratio at 0.485 UniCredit shares for each Commerzbank share, representing a 4% premium to the pre-announcement price.
