Risks seen in drawn-out Commerzbank-Dresdner deal
Written on September 1, 2008
Commerzbank’s (CBKG.DE: Quote, Profile, Research, Stock Buzz) $14.5 billion takeover of Dresdner Bank faces challenges not only from slowing economies but from a drawn-out sale process which will leave seller Allianz (ALVG.DE: Quote, Profile, Research, Stock Buzz) with a big stake.
Analysts say the sale in two stages means no clean break from Allianz, which could further complicate the fusing of two banks of similar size, while the deal’s financing remains iffy.
Germany’s No. 2 lender is paying 9.8 billion euros for loss-making Dresdner, which Allianz tried for seven years to turn around before selling it for less than half what it paid in 2001.
The deal is aimed at creating a group to rival flagship German lender Deutsche Bank (DBKGn.DE: Quote, Profile, Research, Stock Buzz).
Allianz drove a hard bargain, extracting more money for Dresdner than analysts had expected and scooping up Commerzbank’s asset management business as part of the deal http://savingpaydayloans.com.
“The acquisition price is relatively high and the change in the business mix does not seem fully convincing in strategic terms,” said UniCredit analyst Andreas Weese in a research note.
The purchase, which may take more than a year to complete, will require Commerzbank shareholders to approve a capital increase after they already turned down some of Commerzbank’s proposed capital measures earlier this year.
Shareholders gave a thumbs-down to the deal unveiled on Monday, sending Commerzbank’s share down nearly 12 percent.
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