Commerzbank Pins Hopes on AGM Firepower as UniCredit’s All-Share Offer Falls Flat

Commerzbank gears up to rebut UniCredit's hostile bid with record profits, AI cost cuts, and political backing, as market prices in scepticism over the all-share offer.

The clock is ticking until Commerzbank’s annual general meeting on 20 May, yet the board’s formal statement on UniCredit’s unsolicited takeover bid remains conspicuously absent. That document, required under German securities law and expected on 18 or 19 May, will lay out management’s official rebuttal – and test how effectively the bank can weaponise its record-breaking financial results to defend its independence.

UniCredit’s offer of 0.485 new shares for each Commerzbank share, published on 5 May, values the German lender at roughly €31.07 per share. With the stock trading at €36.23 in Frankfurt, the market is already delivering its verdict. The 17% premium the market is pricing in reflects deep scepticism that the all-share proposal, which lacks a cash sweetener, reflects fair value. Over twelve months, Commerzbank shares have surged 41.51%, far outstripping the gains implied by the bid.

Chief executive Bettina Orlopp is banking on a bold artificial-intelligence push to prove the bank can thrive on its own. A gross reduction of around 3,000 positions is planned, with most coming from efficiency gains generated by AI – not from the core workforce. Instead, the axe will fall on expensive external call-centre capacity and third-party IT providers. The management is adamant there will be no compulsory redundancies among permanent staff. “The Italian proposal is a shrinking strategy,” Orlopp warned, pointing to estimates of 10,000 to 11,000 job losses under a UniCredit takeover.

Those cost-cutting credentials are backed by a record operational performance. First-quarter operating profit jumped 11% to €1.358 billion, the best quarterly result in the bank’s history. Net income after minorities reached €913 million, while net fee and commission income hit an all-time high of €1.102 billion. The board has set a net profit target of at least €3.4 billion for the full year 2026 and is investing €600 million in AI through 2030, with the goal of delivering a 21% return on tangible equity by that date.

Shareholder returns form the other pillar of the defence. The AGM will vote on a dividend proposal of €1.10 per share, and a new authorisation to buy back up to 10% of share capital. Combined with buybacks already executed worth around €1.5 billion, the bank expects to return a total of approximately €2.7 billion to shareholders for the 2025 financial year – a powerful argument against ceding control without a premium.

Political backing is firmly on Commerzbank’s side. Chancellor Friedrich Merz has described UniCredit’s approach as “hostile and aggressive” and “categorically rejected” the bid. The German government still holds just over 12% of Commerzbank shares. Orlopp has also taken aim at ECB Vice-President Luis de Guindos, calling his positive signals for cross-border bank mergers “baffling”. UniCredit currently controls almost 30% of the target’s shares.

The technical picture, however, adds a note of caution. The relative strength index stands at 83.3, deep in overbought territory, and the stock sits 8.07% above its 50-day moving average after a blistering run. The acceptance period for the offer runs until 16 June, extendable to 3 July under certain conditions. UniCredit expects regulatory approvals to delay completion until 2027.

For now, all eyes are on the formal statement. The more precisely management can underline the gap between UniCredit’s paper offer, the market price, and the self-funded value creation strategy, the harder it becomes for the Italian bank to sustain its case – both with shareholders and with the politicians watching from Berlin.