UniCredit Considers Three Strategies to Enhance Commerzbank Acquisition Offer, Reports Il Messaggero

The Commerzbank logo is displayed at a branch as Italy's UniCredit makes an unsolicited move to raise its stake above 30% in Commerzbank, thus exceeding the mandatory takeover threshold in Germany. On March 22, UniCredit (CRDI.MI) is reportedly evaluating three strategies to potentially enhance its all-stock takeover bid for Commerzbank (CBKG.DE), according to Italian newspaper Il Messaggero, which did not disclose sources. A UniCredit representative referenced recent remarks from CEO Andrea Orcel, who stated last week that a proposal with a higher premium is not under consideration at this time. The newspaper suggests that UniCredit might raise the swap ratio to between 0.50 and 0.52 UniCredit shares per Commerzbank share, including a cash component of 20% to 30%, requiring an outlay of €8 billion ($9.3 billion) to €12 billion, along with a premium ranging from 10% to 15%. Furthermore, UniCredit may explore the possibility of paying cash for 40% to 50% of the total, which would elevate the premium to between 15% and 20%. Another option could involve offering Commerzbank shareholders the choice between a larger cash component or a higher share component, potentially with a price floor, guaranteeing a minimum premium of 15%. Recently, UniCredit announced a €35 billion ($40.5 billion) bid to augment its ownership in Commerzbank, which currently remains slightly under 30%. The bank anticipates that the low premium associated with the bid will limit uptake, resulting in a stake that just surpasses 30%, thereby allowing it the flexibility to purchase Commerzbank shares on the open market in the upcoming year. Orcel mentioned on Wednesday that UniCredit is willing to enhance the bid if discussions with Commerzbank yield a unified vision. Germany's financial regulator is expected to establish the exchange ratio for the bid at 0.485 UniCredit shares for each Commerzbank share, representing a 4% premium compared to the pre-announcement price. ($1 = €0.8643) Reporting by Valentina Za; Edited by David Holmes and Mark Porter. Our Standards: The Thomson Reuters Trust Principles.