Legal tangle
October 6, 2010
Deutsche Bank announced in September it would offer smaller Postbank shareholders who hold what's called the free float 25 euros per share as part of an effort to consolidate control over Postbank by increasing its 29.95 percent stake. Now, one of those small shareholders, Dusseldorf-based Effecten-Spiegel, is close to filing a legal complaint once the offer is made official.
Germany's financial regulator BaFin had allowed for the shares to be sold at 25 euros, based on a three-month average. Deutsche Bank intends to fund the purchase through 10.2 billion euros ($14.1bn) in capital, raised by issuing 308.6 million new shares at 33 euros each.
Law circumvented?
Marlis Weidtmann, executive director of Effecten-Spiegel, which holds 150,000 Postbank shares, says Deutsche Bank is trying to circumvent laws regulating takeovers.
Deutsche Bank has had a multi-tiered agreement with Postbank's owner, Deutsche Post, since January 2009, in which it agreed to buy the former parent company's 27.4 percent stake for 45 euros a share. But those shares won't actually change hands until 2012, leaving Deutsche Bank with less than 30 percent ownership of Postbank for now and thus free to buy shares for 25 euros each – their average value over the last three months.
Weidtmann added that the details of the agreement have never been made completely public, but that independent calculations based on widely available information show the shares would be worth at least 36 euros each, if it were to be legally acknowledged that Deutsche Bank has more than a 30 percent stake in Postbank.
“It makes us suspicious, because we have to ask ourselves, ‘What's written in there?'” Weidtmann told Deutsche Welle. “What surprises me is that BaFin has played along thus far.”
A ‘soap bubble'
Bonn-based lawyer Wienand Meilicke, who co-authored the report published in the trade journal ZIP, which valued the Postbank shares at 36 euros, says “a whole lot of people” will be short-changed through Deutsche Bank's plans.
“If someone sticks a needle in this thing the soap bubble will pop,” he told Deutsche Welle. “I am of the opinion that there is a significant chance this case will be successful in court. But that means fighting the German banking establishment.”
According to Weidtmann, Deutsche Bank has so far defended its plans by “always pulling back and making the argument that the shares won't change hands until 2012.”
Tight-lipped
A Deutsche Bank spokesman told Deutsche Welle the bank “sees no legal grounds for the complaint.”
He referred to the position taken by Frankfurt-based law firm Hengeler Mueller which, in a January 2009 press release, spoke of having advised Deutsche Bank on an “improved transaction structure” for its acquisition of Postbank shares.
A Hengeler Mueller spokesman, however, declined to comment.
Postbank has 24 million retail clients – more than any other bank in Germany – and Deutsche Bank has been working to increase its number of domestic customers. Also, banks will soon be required to hold more capital to safeguard against future financial crises under the new Basel III accord, which will come into force in 2012. Acquiring Postbank will likely help Deutsche Bank meet those requirements.
Author: Gerhard Schneibel
Editor: Nicole Goebel