Commerzbank’s €1.10 Dividend Tests UniCredit’s Resolve as Shareholders Snub Takeover Offer

UniCredit's all-share bid for Commerzbank draws just 1.1% acceptance; Commerzbank counters with a record dividend and a standalone growth plan backed by AI investments and 3,000 job cuts.

The battle for Commerzbank is turning into a test of wills. UniCredit’s all-share bid has drawn only 1.1% of shareholders as of May 26, a paltry endorsement that leaves Italy’s second-largest bank far short of the control it seeks. That rebuff came just as Frankfurt’s lender paid out a record €1.10 per share dividend — a deliberate show of financial muscle that reinforces management’s case for going it alone.

UniCredit is offering 0.485 of its own shares for each Commerzbank share. At launch the deal was worth €34.56, already below the day’s closing price of €36.48. Since then Commerzbank’s stock has climbed further to €36.65, widening the discount and making the bid an increasingly tough sell. The Italian bank already owns 38.87% of Commerzbank, but that stake has not translated into widespread support for a full takeover.

Commerzbank’s board has unanimously advised shareholders to reject the proposal. Their reasoning: no adequate premium and no convincing integration plan. Analyst consensus backs that stance, with the median price target at €41.50. Adding to the tension, former Commerzbank CEO Manfred Knof saw his 2024 variable pay slashed by 30% after the supervisory board found he failed to disclose a secret meeting with UniCredit chief Andrea Orcel last September.

The dividend — part of a €2.7bn capital return programme for 2025 that equates to a 100% payout ratio — is the centrepiece of Commerzbank’s independence strategy. Under the “Momentum 2030” plan, management targets €16.8bn in revenues by the end of the decade, backed by €600m in artificial intelligence investments and 3,000 job cuts. A return on equity of 21% and a cost?income ratio of 43% are the headline ambitions.

Operationally, the bank delivered an 11% year?on?year earnings improvement — exactly the kind of momentum needed to make the stand?alone story stick. Still, the wider environment is turning less benign. Creditreform Rating expects the default rate for German companies to rise from 1.88% to 2.08%, with small?to?medium enterprises, transport, logistics and construction seen as most vulnerable. Higher credit losses would put pressure on loan?loss provisions across the banking sector.

Closer to home, Deutsche Bank held its first in?person annual general meeting in five years and declared a €1.00 dividend, targeting an ROE above 13% by 2028. While not a direct proxy, the sector comparison offers investors a yardstick for what a German bank can deliver on its own terms.

The technical picture for Commerzbank’s stock remains robust, with the share price trading 6.22% above its 50?day moving average and 9.00% above the 200?day line. But the 14?day relative strength index has climbed to 71.0, signalling overbought conditions that could invite short?term profit?taking. The stock sits just under its 52?week high of €37.75, having gained 37.99% over the past twelve months.

With the offer acceptance period now open until June 16, time is running short for UniCredit to build momentum. A rising UniCredit share price could make the exchange ratio more attractive, but for now the arithmetic remains firmly in Commerzbank’s favour. Without a meaningful sweetener, the Italian bank’s ambition of forging a cross?border European banking champion appears to be running into a wall of indifference – and a dividend cheque that underlines exactly what Commerzbank thinks it is worth.