Italy's UniCredit Takes 9% Stake in Germany's Commerzbank — 2nd Update

By Adria Calatayud

Italy's UniCredit took a stake of around 9% in smaller German peer Commerzbank and opened the door to further share purchases, reviving the prospect of a deeper tie-up between the banks.

The Italian bank--one of the biggest in the eurozone--said Wednesday it would engage with Commerzbank about value-creating opportunities and request authorization to potentially exceed a 9.9% shareholding at a later date.

Commerzbank's shares surged on the news, climbing 15% in morning trade in Europe, while UniCredit fell 0.1%.

A potential UniCredit-Commerzbank deal has been the subject of speculation in the past, with media reports pointing to interest from parties including the Italian bank after merger talks between Commerzbank and Deutsche Bank collapsed in 2019, and renewed reports of a tie-up in 2022. Some analysts consider a deal possible.

Investors have long looked for consolidation activity among European banks, but deals have been few over the past years, with the recent exception of UBS's state-supported takeover of Credit Suisse.

Elsewhere, Spain's Banco Bilbao Vizcaya Argentaria is pursuing a hostile takeover of smaller rival Banco de Sabadell, after first being rebuffed in 2020.

UniCredit's chief executive, Andrea Orcel, earlier this year said his bank was interested in acquisitions, but only if they made sense for shareholders.

A regulatory submission to exceed a 9.9% holding in Commerzbank would give UniCredit flexibility, and any decision on the stake would depend on the investment meeting its financial parameters, UniCredit said.

The bank said it bought 4.49% of Commerzbank from the German government and the rest on the market. UniCredit said it supports Commerzbank's management and supervisory boards and the progress they made in improving the bank's performance.

The German finance agency earlier said it sold a first block of its crisis-era stake in Commerzbank for 702 million euros ($773.6 million), reducing its shareholding to 12% from 16.49%. UniCredit outbid all other offers by paying 13.20 euros a share, a premium on Commerzbank's closing price of 12.60 euros a share on Tuesday, the agency said.

A potential full takeover of Commerzbank by UniCredit would make financial and strategic sense for the Italian bank, bolstering its presence in Germany and Poland, Keefe, Bruyette & Woods analysts Hugo Cruz and Ben Maher wrote in a note to clients. UniCredit's interest in Germany means rival banks looking for acquisitions in Italy could face less competition, the analysts added.

The German government remains the largest shareholder in Commerzbank after the sale, it said. However, the government said last week that it wanted to begin a process to exit the stake it built in Commerzbank during the financial crisis of 2008.

"Commerzbank has shown to be standing firmly on its own feet again," said Eva Grunwald, member of the executive board of Germany's finance agency.

Commerzbank separately said late Tuesday that Chief Executive Manfred Knof would step down from his position after his contract runs out at the end of 2025.

The agency said it had committed to a 90-day restriction on sales of further shares, with certain exceptions that weren't detailed.

Write to Adria Calatayud at adria.calatayud@wsj.com

(END) Dow Jones Newswires

September 11, 2024 05:30 ET (09:30 GMT)

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