The German government today launched a takeover of troubled Hypo Real Estate bank with the aim of stabilising the financial markets as the worst global slump since the 1930s plays out.
Berlin, acting through the Financial Markets Stabilisation Fund, said it would offer shareholders €1.39 a share. 'The offer price of €1.39 per share represents a premium of approximately 10% to the statutory minimum offer price of €1.26,' a statement said.
Stressing that the operation was a 'voluntary public takeover offer to the shareholders of Hypo Real Estate,' it said further details would be released 'within the next few days after approval by the stock market regulator.
The Fund said it intended to acquire 100% of the outstanding HRE shares but added that it had set no minimum acceptance level.
It said the move was aimed at 'stabilising the German financial market,' as authorities feared a collapse of HRE could be as damaging as the bankruptcy of US investment bank Lehman Brothers in September.
Germany recently passed a controversial law allowing the state to nationalise HRE, by force if necessary but only as a last resort. The legislation would enable Berlin to seize the shares of US investor Christopher Flowers, who heads a consortium that owns almost 24% of HRE.
The German state currently owns 8.7% of HRE, a specialist property lender that has received more than €100 billion in private and public aid so far to keep it afloat. The bank posted a 2008 net loss of €5.46 billion as it struggled in the fallout from the worst global slump since the 1930s.
In December, HRE said it would slash its workforce by almost half in three years, part of a series of draconian moves to save it from bankruptcy. HRE and its Irish subsidiary Depfa were caught up in a liquidity crunch that worsened after the US investment bank Lehman Brothers declared bankruptcy in September.
