Deutsche Bank AG (DB), Germany's largest bank, said Friday that it has agreed to buy a 29.75% stake in German retail bank Deutsche Postbank AG from Deutsche Post AG, Germany's largest mail and logistics company, for €2.79 billion.
Deutsche Bank will pay €57.25 per share in cash for the stake in Deutsche Postbank, trumping a competing offer from Spain's Banco Santander SA.
The acquisition of the minority stake, which is subject to approval by regulatory and anti-trust authorities and the German Government, will close in the first quarter of 2009.
Deutsche Bank said it plans to finance the acquisition through an equity raising of up to €2.0 billion.
The acquisition of 29.75% stake set the stage for a full takeover of Postbank by Deutsche Bank, because Deutsche Post has granted Deutsche Bank the option to buy an additional 18% of Postbank for €55 per share. The option can be exercised between 12 months and 36 months after Deutsche Bank acquires the initial 29.75% stake. Deutsche Post also has an option to sell its remaining stake of 20.25% plus one share to Deutsche Bank for €42.80 per share. That option can be exercised between 21 months and 36 months after the sale of the initial stake.
Deutsche Post said Deutsche Bank's acquisition of a minority stake will have no impact on branches, jobs or the brand of Postbank.
Deutsche Bank and Postbank have agreed in principle to cooperate in several areas, including the distribution of home finance and investment products. They also plan to extend their existing retail outlet cooperation beyond 2012.
Deutsche Post, which owns the DHL courier business, had indicated late last year that it wanted to sell its stake in Postbank in order to focus on its mail and logistics businesses.
Postbank has 14.5 million clients in Germany, while Deutsche Bank has 14 million clients in private and business banking of which 9.7 million are in Germany.
Deutsche Bank, which generates about two-thirds of its revenue outside Germany, wants to expand its retail banking business in its domestic market. It was waiting for an opportunity ever since it lost a bidding war for Citigroup's German retail operations to France's Credit Mutuel in July.
There is growing consolidation in the German banking sector recently. Following the Citigroup-Credit Mutuel deal, Commerzbank AG, Germany's second largest, last month agreed to buy Dresdner Bank AG, the country's third largest bank, from insurer Alllianz SE in a deal worth €9.8 billion.
Deutsche Bank shares are currently trading on the NYSE at $82.19, down $1.88 or 2.24%. The company's shares closed 2.5% lower at €57.90 in Frankfurt. Postbank shares closed 6.3% lower at €42.90 in Frankfurt, while Deutsche Post ended 2.8% higher at €16.60.
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