Merger Wave
September 12, 2008
Germany’s Postbank, a unit of former German postal monopoly Deutsche Post AG, has always been the savings bank for the average retail customer - a place where he or she could make small deposits and buy postage stamps at the same time.
Now the country's mammoth Deutsche Bank has agreed to buy a 29.75 percent stake in Postbank for 2.79 billion euros ($3.9 billion) in cash.
A statement released on Friday, Sept. 12, by the Frankfurt-based Deutsche Bank -- whose investment banking arm makes it the only major German player on Wall Street and London’s financial district --said the deal, which should be completed by the first quarter of next year, was subject to regulatory approval.
Postbank is Germany’s biggest retail bank, with nearly 15 million customers.
Option to buy further stake later
The bank said that Post AG had also given Deutsche Bank an option to acquire another 18 percent of Postbank for 55 euros ($77) per share. That option could be exercised within a three year period from the time that the purchase deal of the initial stake closes.
Under German law, a stake that is 30 percent and above would oblige a potential suitor to make an offer to buy the remaining shares listed on the stock market. Based on Postbank's current share prices, Deutsche Bank would have to fork out at least seven billion euros to fund a full acquistion, which would require it to raise fresh capital.
All three companies -- Deutsche Bank, Deutsche Post and Postbank are among Germany's top-30 listed on the DAX exchange.
Consolidation trend in banking sector
Post AG had owned more than half of all Postbank shares, with the remaining shares floated on the market.
The deal will be the second largest bank merger this month in Germany, following the heels of Commerzbank, which acquired its Dresdner Bank unit from the insurance giant Allianz for 9.8 billion euros.
Even before the Commerzbank/Dresdner merger, France's Credit Mutuel made waves in July when it announced its acquisition of US Citibank's German network for nearly five billion euros, representing a move towards greater consolidation in the banking industry.
German Finance Minister Peer Steinbrueck welcomed the Deutsche Bank/Postbank merger.
“We simply need to do this to stay competitive and gain access to the benefits of international capital markets,” he said at a banking conference in Frankfurt on Thursday, Sept. 11.
On Wednesday evening, Sept. 10, both Deutsche Bank and Deutsche Post confirmed that talks were advanced, but stressed that the outcome was open.
Spanish bank was also a suitor
The German financial newspaper Handelsblatt had reported earlier in the week that the private Spanish banking group Santander, Europe's second largest bank in terms of market capitalization, was in the bidding for all of Post AG's shares. Banco Santander was reportedly interested in a full takeover and had offered to buy out remaining Postbank shareholders for an undisclosed sum.
But the German government and Deutsche Post AG chairman Frank Appel had favored an all-German merger instead.
The deal also has Germany's unions up in arms over the possible loss of jobs in the consolidation process. Uwe Foulong, leader of the German trade union Verdi, told the Bonn newspaper General Anzeiger that thousands of jobs would be cut.
The merger of rival Commerzbank and Dresdner bank could result in the loss of 6,500 jobs.