Commerzbank will now shell out €1.4 billion in cash for the remaining minority holding and move up the purchase to January from the final half of 2009. It’s currently working to complete the purchase of an initial 60 percent stake of Dresdner.
The bank in August said it would give insurance behemoth Allianz €1.6 billion in cash as well as its Cominvest retail trading unit and a 30 percent stake in itself in a two-tier buy of Dresdner. But the terms now call for Allianz to be left with €3 billion in cash and just an 18.4 perecent Commerzbank holding in addition to Cominvest.
Commerzbank will also only pay €250 million for bad Dresdner investments it won’t be taking in the deal, down from an earlier-agreed €975 million.
“Amid continued volatile financial markets, this move allows us complete operating flexibility,” said Commerzbank CEO Martin Blessing in a statement.
Investors had been concerned that a collapse of Commerzbank’s shares had put the acquisition in doubt. The stock has tumbled from about €20 at the start of August to a 52-week low Wednesday of €6.55. Investors Friday rejoiced at the announcement, pushing Commerzbank shares up 7.4 percent to €7.39.
By comparison, the benchmark DAX index was mostly unchanged. Allianz shares also leapt Friday, trading 6.5 percent higher at €65.70.
Allianz put Dresdner up for sale earlier this year after trying for seven years to make cross-selling of banking and insurance products profitable. Commerzbank apparently beat out a higher bid from China Development Bank, which would likely have met with resistance from Chancellor Angela Merkel’s government.
The deal is also part of a broader consolidation of Germany’s banking landscape where private lenders have trouble competing with a phalanx of cooperative and government-backed lenders. Deutsche Bank, the country’s biggest bank, is buying Deutsche Postbank in a three-step agreement announced just days after the Commerzbank/Dresdner deal.