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Deutsche Bank Takeover of Postbank Suffers New Delay

Stocks in this article: DB

NEW YORK (The Deal) -- The Deutsche Bank  (DB) takeover of Deutsche Postbank faces further months of delay and possibly up to €1.6 billion ($2.14 billion) of compensation payments, after the country's Federal Supreme Court sent a minority shareholder's case back to the appeals court to investigate a alleged concert party deal.

In a Tuesday, July 29 decision, the court declined to give regulatory clearance to the takeover, which began with Deutsche Bank's 2008 agreement to acquire a 29.75% stake in Postbank from its majority shareholder Deutsche Post for a price of €57.25 a share. The court sent the case back to the regional High Court in Cologne to examine whether Deutsche Bank and Deutsche Post had been acting in concert.

Deutsche Bank followed the initial purchase agreement with a revised deal with Deutsche Post in January 2009, at the height of the financial crisis, when the two sides agreed that the original all-cash offer should be amended with a complex paper deal. Deutsche would acquire 22.9% of Postbank in exchange for an 8% stake in itself, and buy €2.7 billion worth of convertible bonds that represented an additional 27.4% Postbank holding. On top of that it also extended €1.1 billion in collateral for options on the remaining 12.1% Postbank stake owned by Deutsche Post.

Importantly, as The Deal reported at the time, Deutsche Bank had already paid €3.1 billion of the total €3.9 billion due at closing but [would] have to wait three years to convert the bonds to Postbank stock. "That will delay a mandatory offer for the outstanding minority stake," The Deal reported at the time, "but give Post access to all the cash in the deal, several years ahead of the earlier agreement."

When Deutsche Bank finally increased its stake beyond the 30% threshold, triggering a mandatory general offer to shareholders in 2010, it made the offer at the-then prevailing price of €25.00 a share.

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