UniCredit Acquires 9% Stake in Commerzbank, Eyes Larger Control Amid Market Speculation

UniCredit has acquired a 9% stake in Germany’s Commerzbank, fueling speculation of a potential takeover. The Italian bank aims to further increase its stake, with plans to explore opportunities for both institutions. This move follows long-standing rumors of consolidation in Europe’s fragmented banking sector.

UniCredit Outbids Rivals for Commerzbank Stake as German Government Reduces Holding

In a move that raised the possibility of CEO Andrea Orcel preparing to take over the German lender, Italy's UniCredit announced on September 11 that it had acquired a 9% stake in Commerzbank and would seek approval to purchase a further stake.

UniCredit acquired nearly half of the stake by competing for shares offered by the German government to reduce its holding in Commerzbank. The remaining shares were acquired on the market, the Italian bank stated in a statement.

According to a German government statement, UniCredit "significantly outbid all other offers" during the book construction process. The bank paid 13.20 euros ($14.58) per share, higher than the daily closing price of 12.60 euros.

Commerzbank's shares increased 17% in early trading, while UniCredit's shares were up 1.3% at 0815 GMT.

UniCredit, Italy's second-largest bank, has acquired a stake in Commerzbank, Germany's second-largest lender. This acquisition follows conjecture that the Italian lender may be interested in acquiring the German bank in recent years.

UniCredit, which has amassed excess capital due to a significant profit increase over the past two years, has announced that it will "explore value-creating opportunities for all stakeholders in both banks."

"UniCredit will submit regulatory filings for authorization to potentially exceed 9.9% of Commerzbank if and when necessary," the bank said.

Commerzbank did not have to address a request for comment.

European bank executives and regulators have long desired to consolidate Europe's fragmented banking market through cross-border mergers. However, they have expressed frustration with the significant obstacles that face colossal deals. Takeover discussions have frequently failed.

"At first glance, we think a full takeover of Commerzbank could make financial and strategic sense for UniCredit, and UniCredit has been clear that it is looking for M&A targets," analysts with KBW said in a note.

Due to a bailout 16 years ago during the global financial crisis, the German state has maintained a 16.5% interest in Commerzbank through its bank rescue fund.

Berlin announced last week that it would reduce its holding. This process began on September 10 with the transfer of approximately 53 million shares, resulting in a 12% stake.

German Officials Hesitant on Foreign Takeover of Commerzbank Amid UniCredit’s Growing Interest

In the past, German officials had privately expressed reluctance to allow a foreign bidder to acquire Commerzbank due to concerns that it would establish an even stronger domestic competitor for Deutsche Bank, per Reuters.

Deutsche Bank declined to provide any commentary regarding the transaction.

Additionally, on September 10, Manfred Knof, Commerzbank's chief executive, declared that he would not seek reelection when his contract expires in 2025.

Knof has downplayed the likelihood of a potential merger between central banks during his tenure, asserting that he was committed to maintaining the bank's independence.

UniCredit, already established in Germany through HVB, has long harbored ambitions to acquire Commerzbank.

People who know the matter have informed Reuters that Orcel, who assumed the role of CEO of the Italian bank in 2021, investigated a transaction and contacted Knof in early 2022, before the Ukraine conflict.

Orcel's predecessor, Jean Pierre Mustier, was also involved in acquiring Commerzbank; however, according to an individual involved in the transaction, political opposition prevented the deal from being completed.

Unexpectedly, a singular buyer acquired Commerzbank shares from the German government. The shares were anticipated to be distributed to numerous institutional investors in lesser quantities.