Commerzbank To Acquire Dresdner Bank

by Ulrika Lomas, for LawAndTax-News.com, Brussels

02 September 2008

Shares in Germany's largest corporate bank, Commerzbank, dropped sharply on Monday following the announcement that it had agreed to acquire Dresdner Bank from insurance company Allianz in a EUR9.8bn deal.

The acquisition is set to create a worrying situation for the country's current leading bank, Deutsche Bank.

The Supervisory Boards of Commerzbank and Allianz approved the agreement in meetings on August 31, 2008.

The transaction will occur in two steps and is expected to be completed by the end of 2009 at the latest, if the necessary approvals are forthcoming.

In the first step Commerzbank is expected to acquire at least 60.2% of Dresdner Bank shares by the start of 2009 at the latest. Allianz in turn will receive approximately 163.5 million new Commerzbank shares, representing a stake of 18.4% in Commerzbank.

Furthermore Commerzbank will sell significant parts of its asset management activities (cominvest) to Allianz for EUR700mn. Commerzbank will in turn receive shares in Dresdner Bank.

In step two, Dresdner Bank will be merged into Commerzbank. As a result, Commerzbank will acquire Allianz's approximately 39.8% remaining stake in Dresdner Bank.

In return, Allianz will receive Commerzbank shares from a capital increase carried out as part of the merger. For this purpose an Extraordinary General Meeting is planned for the beginning of 2009. The merger is likely to be completed by the end of 2009.

In a statement on its website this Monday, Commerzbank's Chairman of the Board of Managing Directors, Martin Blessing announced that:

"We are taking advantage of a unique opportunity to make Commerzbank the leading bank for private and corporate customers in Germany."

"We are building a market leader with European significance, and are creating added value for our shareholders. At the same time, the deal will secure many attractive jobs for the long term, even though unfortunately we cannot keep all current positions."

Michael Diekmann, Chief Executive Officer at Allianz added:

"This transaction is a milestone for banking consolidation in Germany and strengthens the German economy."

"With an approximate stake of up to 30%, Allianz will be Commerzbank's largest shareholder and will gain access to its powerful distribution network."

"Commerzbank and Dresdner Bank are a terrific match - we have outstanding growth prospects and the most effective distribution platform in the German banking industry," explained Blessing, who concluded:

"The new Commerzbank will become an even more powerful and reliable partner for its clients."

The new Commerzbank will focus on the following segments: Private and Business Customers, Mittelstandsbank, Central and Eastern Europe, Corporates & Markets (including Public Finance) and Commercial Real Estate.

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