Page last updated at 11:07 GMT, Friday, 28 November 2008

Commerzbank purchase accelerated

commerzbank sign
Germany's second biggest bank set to complete take over of Dresdner

Commerzbank has said its takeover of Dresdner Bank from insurer Allianz will be completed earlier than expected.

Commerzbank will now pay 5.1bn euros ($6.6bn; 4.2bn) for its rival, substantially less than the 9.8bn euro deal originally announced in September.

The deal's acceleration is a result of falling share values with Commerzbank's down 61% since the deal was unveiled.

Commerzbank shares were up 4.96% and Allianz shares ended up 9.12% at the close of trading in Frankfurt.

In the current situation on the financial markets an accelerated takeover of Dresdner by Commerzbank is to the advantage of all parties
Michael Diekmann
Chief Executive, Allianz

Commerzbank already owns 60% of Dresdner and the remaining 40% will be purchased in January.

The revised deal will mean that Commerzbank will no longer have to issue new shares, but will pay for the remainder in cash.

A major factor in Commerzbank's ability to pay more cash was the 8.2bn euro capital boost it received from the German government on November 2.

Allianz will receive 1.4bn euros for the remaining stake.

'Accelerated takeover'

Dresdner Bank, Frankfurt
Dresdner Bank's offices in Frankfurt

Allianz said that the deal could now go ahead six to nine months ahead of plan.

The deal will leave Allianz with approximately 18% of the combined bank.

Allianz had originally paid 14bn euros for Dresdner in 2001.

Allianz Chief Executive Michael Diekmann said: "In the current situation on the financial markets an accelerated takeover of Dresdner by Commerzbank is to the advantage of all parties."

Commerzbank's chairman, Martin Blessing saw the accelerated transaction as "speeding up the integration process".

Redundancies

The ability for Commerzbank to pay cash and not cause more shareholder dilution has been the driving force in leading its share price higher.

It is expected that approximately 9,000 jobs will be lost worldwide.

In London 1,000 jobs are expected to be lost with Dresdner Kleinwort, the group's investment banking arm expected to bear the brunt of the job losses.

Commerzbank will see the number of retail clients almost double as a result of the deal.



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