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Home Business

how UniCredit built its Commerzbank stake

2 October 2024
in Business
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how UniCredit built its Commerzbank stake
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Andrea Orcel, CEO of UniCredit, surprised Germany by increasing the bank’s stake in Commerzbank from 9% to 21%, using a strategy reminiscent of past hostile takeover battles. By exploiting discrepancies in EU disclosure rules for financial derivatives, UniCredit was able to disclose a significant stake in Commerzbank while complying with ownership limits. The core of the trade involves total return swap agreements with Barclays and Bank of America, allowing UniCredit to gain economic exposure to Commerzbank’s stock. This maneuver, orchestrated without external advisers, showcases UniCredit’s strategic patience and creativity in pursuing its acquisition goals. During the 2008 financial crisis, Porsche and Schaeffler Group faced significant losses due to drops in VW and Continental shares. Orcel has now hedged his Commerzbank position with a collar structure to limit downside risk while demonstrating serious interest in gaining control of the bank despite political opposition. UniCredit’s trades have also made it difficult for potential rivals to build a similar derivatives position in Commerzbank, making counter bids more challenging for others.

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