Hypo Real Estate has agreed with the board of Depfa Bank to acquire all the shares in the German lender in a deal worth about €5.7 billion.
"The company will pay Depfa Bank shareholders an amount of €6.80 and 0.189 new shares of Hypo Real Estate Holding AG for each share in Depfa Bank," the German bank said in a statement.
Depfa lends to governments for such things as big infrastructure projects.
Based on the closing Xetra price for Hypo Real Estate stock on July 20th, the value of the offer per Depfa Bank share amounts to €16.14, it said, representing a premium of 17 per cent over the share price of Depfa Bank on that date.
Hypo Real Estate said the deal - which will be financed with equity, hybrid instruments and cash - has to be approved by a 75 per cent majority of the Depfa Bank shareholders at an extraordinary meeting.
It expects to get more than €150 million in revenue and growth synergies from the acquisition after 2010 and is targeting around €40 million in pretax earnings contributions from the deal in the first year after the transaction closes.