Europe’s biggest ever cross-border banking merger moved a step closer over the weekend, as Munich Re announced that it seemed set to approve the offer from UniCredit, Italy’s largest bank, to acquire Germany’s HypoVereinsbank (HVB) in an all share deal.
The Munich Re Group holds 18.3 percent of HVB’s share capital, while the bank in turn has a stake of almost 10 percent in Munich Re and 5 percent in primary insurer ERGO Versicherungsgruppe AG. Munich Re holds a majority interest of 94.7 percent in ERGO. It said that the “successful sales cooperation between the ERGO Insurance Group and HypoVereinsbank would remain unaffected by this merger of the two banks.”
UniCredit plans to issue five new shares for each share of HVB, which values the bank at around 15.4 billion euros ($18.8 billion). The offer has also been extended to shareholders in HVB’s Austrian and Polish subsidiaries, raising the total value of the acquisition to 19.2 billion euros ($23.3 billion).
The Chairman of Munich Re’s Board of Management, Nikolaus von Bomhard, stated: “We welcome the strategic initiative of our cooperation partner HypoVereinsbank in entering this cross-border banking deal. As a major HypoVereinsbank shareholder, we will carefully review the share swap offered by UniCredit.”
Under the proposal Unicredit’s CEO Alessandro Profumo would become the CEO of the combined bank, while HVB head Dieter Rampl would become chairman. An extraordinary general meeting of HVB shareholders has been scheduled for July 27 to consider the plan.
If approved it would create one of Europe’s largest banks, and the first truly “cross-border” one. It is also expected to result in some 9000 job losses, mostly in Germany, as the two banks plan to introduce cost cutting measures that they hope will save up to 1 billion euros ($1.22 billion).