Deutsche Bank expects to use €7.7 billion of a €10 billion share sale to buy and recapitalise Deutsche Postbank, Germany's largest retail bank.
Deutsche Bank unveiled plans yesterday for a lowball takeover offer for Postbank to counterbalance its heavy reliance on investment banking with less volatile retail business as new Basel III rules loom on the level of capital banks must carry to guard against risk.
Deutsche Bank said it expected to offer €24-25 per share to raise its stake in Postbank from just below 30 per cent to a majority in a multi-stage deal, pumping money into the undercapitalised bank in the process.
"With the intended consolidation of Postbank we will be completing another very important step in our strategy of reinforcing our so-called stable businesses alongside our investment banking," chief executive Josef Ackermann said.
The offer price amounts to the legal minimum and was below Friday's closing price of €27.03 euros, sending Postbank shares tumbling 7.2 per cent on the market today.
Deutsche Bank's shares were up 1.8 per cent today.
"Deutsche is trying to get Postbank on the cheap. The question now is whether shareholders will go for it. I doubt that," Landesbank Baden Wuerttemmberg analyst Olaf Kayser said.
Deutsche Bank said it was confident it could raise its stake to a majority.
Deutsche Bank had previously struck a deal to buy a 27 per cent Postbank stake from Deutsche Post at €45 a share in 2012, which would then have required a mandatory offer to the roughly 30 per cent freefloat shareholders at the same price.
Mr Ackermann said pouncing on Postbank now rather than waiting until 2012 would save Deutsche €1.7 billion.
Reuters