Germany-based Deutsche Bank and Deutsche Post have agreed on an improved transaction structure for Deutsche Bank’s acquisition of Deutsche Postbank shares based on the previous purchase price. The contract now comprises three tranches, enabling Deutsche Bank to complete the acquisition in a capital-efficient manner.
In return, Deutsche Post will receive the proceeds of the whole transaction on the day of the closing and thus three years earlier than expected. Both parties expect the transaction to close by February 27, 2009 at the latest, subject to the approval of the antitrust authorities. The cash value of the transaction is E4.9 billion.
As a first step, Deutsche Bank plans to acquire 50 million Postbank shares, corresponding to a stake of 22.9%, in a non-cash capital increase of E1.1 billion excluding subscription rights. As a result, Deutsche Post will acquire a shareholding of approximately 8% in Deutsche Bank. Deutsche Post can dispose over half of this holding from the end of April 2009, the other half may be disposed of from mid-June.
Deutsche Bank will also underwrite mandatory exchangeable bonds issued by Deutsche Post. After three years, these bonds, including interest payments accrued, will be exchanged for 60 million Postbank shares, or a 27.4% stake. The bonds are zero-coupon bonds with a 4% accrued interest per year. The cash value of the bonds at the time of the closing is anticipated to be approximately E2.7 billion.
Put and call options remain in place for the remaining 26.4 million shares (or 12.1%). Deutsche Bank will pay a cash collateral for the options amounting to the cash value of E1.1 billion at the time of the closing. The exercise periods are now set between the 36th and 48th month after closing.
Through the collateralization of the put option and the subscription to the mandatory exchangeable bonds, Deutsche Post will receive approximately E3.8 billion in direct liquid funds, of which E3.1 billion was received by Deutsche Post earlier in January 2009.
Upon closing of the new structure Deutsche Bank’s tier one capital consumption will be reduced to E1 billion versus E2.2 billion under the previous structure. The value for each tranche of the transaction may be adjusted before closing.
Stefan Krause, Deutsche Bank’s CFO, said: We are pleased to have achieved the adjustment of the structure of the contract together with Deutsche Post. Thereby Deutsche Bank underscores the fact that a strategic holding in Deutsche Postbank is still of high value even in today’s difficult market environment. At the same time, we continue to pursue our declared strategy of strengthening our capital base and keeping a BIS ratio (tier one) of about 10%.
