Unicredito Swallows HVB
June 12, 2005
German news agency DPA and Italian news agencies reported that the two boards have separately agreed to the merger. Unicredito has offered to swap five of its shares for each HVB share in an agreement reached between representatives of the two banks, sources said.
Based on trading late Friday, HVB would be valued at around 20.50 euros per share, totaling about 15.1 billion euros.
If the tie-up goes through, the combined resources would create the fourth largest bank in the euro zone and the ninth biggest in Europe as a whole.
A takeover by Unicredito -- Italy's most profitable bank with a 2004 net profit of 2.13 billion euros -- is the price HVB is paying for the long real estate crisis in Germany and the previous merger that led to the bank's creation in 1998.
HVB was set up seven years ago when Bayerische Vereinsbank tied up with Hypo-Bank, which specialized in real estate loans especially in the east of Germany that went into default.
The new company will employ about 127,000 people, but analysts believe that about 10,000 employees will lose their jobs as a result of the merger, Reuters news agency reported. The takeover is expected to result in cost savings of about 900 million euros per year, according to reports.