Commerzbank and Müller: A marriage of convenience?

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Commerzbank and Müller: A marriage of convenience?

May 1 2004 might turn out to have been one of the more decisive recent milestones in the evolution of the German financial services sector. That was the day when board members of Commerzbank and HVB met at a hotel at Frankfurt Airport to discuss their merger plans.

Commerzbank benefits from Müller’s surprise medicine

Commerzbank would later be described by some sections of the press as the party that was rebuffed during the negotiations. Others say that Commerzbank proposed that more time was needed for HVB to restructure its loan book, and that merger negotiations should be put on hold for a year.

Commerzbank’s CEO, Klaus-Peter Müller, rejects the suggestion that the subsequent breakdown of those negotiations and HVB’s purchase by UniCredit of Italy exerted any pressure on Commerzbank to look for an alternative acquisition. Indeed, when the opportunity arose in 2005 for Commerzbank to increase its one-third share in Eurohypo to 98%, Commerzbank was as surprised as everybody else. By then, Eurohypo was expected to push ahead with an IPO, which was scuppered when Allianz accepted an offer from Hypo Real Estate for its stake in the real estate specialist. "We didn’t provide the trigger for the Eurohypo acquisition," says Müller. "We were taken by surprise when Hypo RE announced that its offer for Allianz’s stake had been accepted. We had been looking at the possibility of buying Eurohypo but we certainly did not expect to do so in 2005."

A transaction that was negotiated and completed in very quick order and later described by Eurohypo’s CEO, Bernd Knobloch, as "a surprise decision for everyone" was generally hailed as a shrewd coup by Commerzbank, financially as well as strategically.

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