Against all odds, Andrea Orcel has succeeded. Almost two years after beginning her climb, Unicredit holds the majority stake in Commerzbank, with a direct stake of 34,4% and a further 16,4% in derivatives that guarantee it maximum flexibility for future acquisitions, but above all allow it to decide the fate of Germany's second largest bank.
A personal success for Orcel, that his permanence in Piazza Gae Aulenti was probably at stake on this match. Despite the surge in capitalization, which under his leadership exceeded 111 billion euros, and 3,2 billion in profits recorded in the first quarter – the highest figure among European banks after the 3,56 billion of the Spanish Santander and on a par with the French Bnp Paribas – the shareholders of Unicredit needed the “Cristiano Ronaldo of M&A”, as it's nicknamed, returns to strike a winning blow after the failed takeover bid for Banco BPM. And now Unicredit is heading in that direction in Germany. Much to the chagrin of the Berlin government, whose opposition appears increasingly tenuous, but also of Commerz management and the banking unions, whose weapons of opposition to the operation now seem to be firing blanks.
Unicredit: A surge in membership demonstrates its confidence.
Unicredit has "achieved the objective set at the start of the offer”, that is, “the exceeding the 30% threshold, aimed at ensuring certainty on its participation and preserving flexibility for any subsequent acquisitions of further shares, should market opportunities arise". These are the words with which the Italian bank announced yesterday the Commerzbank takeover bid surged from 1% to 7,58%. of capital. A high level, achieved despite repeated calls not to participate launched in recent weeks (the last one on Tuesday) by the management of the second-largest German bank. But this 7,58% becomes even more significant if two factors are taken into account: the first is that the official closing of the offer is still several days away and that Unicredit has already made it clear it intends to take advantage of the additional period. Therefore from June 16th the closure will be postponed to July 3rdThe second is that the offer is still at a discount. 30,8 euros are on the table against the current value of Commerzbank shares of around 37 euros (-0,3% in Frankfurt). However, at this point it is difficult to imagine a relaunch, especially since many investors seem to have focused not on the lack of premium, but on the post-merger numbers presented by Unicredit which, in its “Commerzbank Unlocked”, forecasts a net profit for the combined entity of around 21 billion euros per year, 45 billion euros in revenues and 14,5 billion euros in savings.
"In the remaining four weeks, taking into account the natural expiration of the tender offer and any additional period, investors still have time to assess both the relative value implied by the exchange between Commerzbank and UniCredit shares and the potential increase in value resulting from a possible integration between the two groups," the Italian bank added. Unicredit already has the shares it needs in its possession, so we might as well join in and see what happens.
This is how Unicredit came to de facto control of Commerzbank
To understand how the majority was reached, it is necessary to do some calculations: even before the start of the offer, Unicredit had in its hands a direct participation This represents 26,77% of Commerzbank's share capital, a stake to which the 7,58% obtained thus far through subscriptions to the tender offer must be added, bringing the total to 34,35%. There is also a further 3,22% in derivatives settled in shares. This brings the total to 37,6%, significantly higher than the 30% target set by UniCredit for the offer.
What's more, the Italian bank has increased the share of derivatives that can only be settled in cash from 10,7% to 13,19%. These derivatives, which are not included in the calculation of the relevant stake for the success of the offering, can be renegotiated with counterparties and converted into contracts with the option of physical settlement. Adding everything together, including direct and indirect stakes, Unicredit reaches an absolute majority, at least theoretically, of the German bank.
Unicredit-Commerz: Future Scenarios
Now that the offer has started to get going, membership could rise further. There's plenty of time until July 3rd. Furthermore, it's not yet known who has taken up the offer, but it's important to keep in mind that giants like Vanguard, Norges Bank, BlackRock, Fidelity, Northern Trust and Dimensional Fund They hold stakes in both banks and have recently shown some support for the operation, voting in favor of the capital increase Unicredit carried out to support the takeover bid. If the institutional investors, which together hold more than 20% of Commerz, were to contribute at least part of this stake, Piazza Gae Aulenti might not even need to convert its entire derivatives package to conquer Frankfurt at the next shareholders' meeting.
Not only that, Unicredit will be able to continue to purchase derivatives or, having exceeded 30%, it will be able to freely buy shares on the market without any further obligation to offer. Meanwhile, the bank has already requested authorization from Bafin, the German regulator, to increase its stake in Commerzbank to 100%, a necessary approval to exercise the derivatives and finalize the share swap.
