Deutsche Post World Net (DPWN) will temporarily take an 8% holding in Germany’s largest bank,Deutsche Bank (DB), under a revised agreement to sell off its Postbank subsidiary, it was announced
today. DPWN has already received €3.1 billion from DB and expects to receive the full €4.9 billionproceeds from the sale by the end of February, which is three years earlier than originallyplanned.Under the original transaction announced on September 12, DPWN planned to sell 29.75% inPostbank to DB for €2.79 billion in cash in the first quarter of 2009, and secured options to sellthe remainder of its 50% plus one share in the retail bank to DB over the following 2-3 years. DBwas due to pay €57.25 per Postbank share and would finance the deal though an equity raising of upto €2 billion.
In October/November 2008, DPWN’s stake in Postbank increased to 62.4% as part of a capitalincrease designed to strengthen Postbank’s capital basis.
DPWN and DB announced today, however, that they had agreed on a new transaction structure forDB’s acquisition of Postbank shares based on the previous purchase price. The contract nowcomprises three tranches, enabling DB to complete the acquisition in a more capital-efficientmanner, they said.
In return, DPWN will receive the proceeds of the whole transaction on the day of the closingand thus three years earlier than expected. Both parties expect the transaction to close by 27February 2009 at the latest, subject to the approval of the antitrust authorities. The cash valueof the transaction is €4.9 billion.
As a first step, DB plans to acquire 50 million Postbank shares – corresponding to a stake of22.9% – in a non-cash capital increase of €1.1 billion excluding subscription rights. As a result,Deutsche Post will acquire a shareholding of approximately 8% in Deutsche Bank. Deutsche Post candispose over half of this holding from the end of April 2009, the other half may be disposed offrom mid-June. It has been agreed that mechanisms designed to avoid market disturbances will beapplied to any such sales. During the interim a certain amount of hedging is permissible, and somemeasures are planned.
At the same time, DB will underwrite mandatory exchangeable bonds issued by DPWN. After threeyears, these bonds – including interest payments accrued – will be exchanged for 60 millionPostbank shares, or a 27.4% stake. The bonds are zero-coupon bonds with a 4% accrued interest peryear. The cash value of the bonds at the time of the closing is anticipated to be approximately€2.7 billion.
Put and call options remain in place for the remaining 26.4 million shares (or 12.1%). DBwill pay a cash collateral for the options amounting to the cash value of €1.1 billion at the timeof 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 mandatoryexchangeable bonds, Deutsche Post will receive approximately €3.8 billion in direct liquid funds,of which €3.1 billion were received by Deutsche Post on 2 January 2009. The value for each trancheof the transaction may be adjusted before closing.
John Allan, CFO of Deutsche Post, said: “The new structure offers us a faster and less riskyway to exit the banking business, thereby freeing up additional resources which we can use toconcentrate on our core business. The new structure also creates the basis for a clear ownershipstructure at Postbank. We are very happy to have reached an agreement that offers extra benefits toall involved.”
Stefan Krause, Deutsche Bank’s Chief Financial Officer, said: “We are pleased to haveachieved the adjustment of the structure of the contract together with Deutsche Post. TherebyDeutsche Bank underscores the fact that a strategic holding in Deutsche Postbank is still of highvalue even in today’s difficult market environment.”
