The German state offered to buy property lender Hypo Real Estate Holding AG, moving closer to the country’s first bank nationalization since the 1930s.
The German bank-rescue fund, Soffin, bid €1.39 ($1.84) a share for no-par value bearer shares of the Munich-based lender, according to a statement on the DGAP newswire today.
The offer is 16 per cent above yesterday’s closing price of €1.20 and is subject to terms and conditions yet to be communicated, according to the statement. Germany already provided €102 billion of credit lines and debt guarantees to sustain Hypo Real Estate after a funding shortage at its Dublin-based Depfa Bank unit brought the company to the brink of bankruptcy.
JC Flowers & Co, which leads a group of investors holding 24 per cent of the bank, said last week it may take legal action to block nationalization.
The state acquired an 8.7 per cent stake in Hypo Real Estate last month as a first step toward taking control.
By gaining a majority stake with today’s offer, the government would clear the way for approval of a capital increase at an extraordinary general meeting. That would enable the state to squeeze out remaining shareholders.
Hypo Real Estate has declined 61 percent this year, valuing the lender at €277 million.
Germany’s upper house of parliament backed legal steps allowing banks to be nationalized on April 3rd, and President Horst Koehler signed the bill into law this week.
JC Flowers, founded by former Goldman Sachs Group Inc. banker Christopher Flowers, has demanded Hypo Real Estate receive “equal treatment” to other troubled German banks.
Bloomberg