Commerzbank's AGM Showdown: UniCredit's Derivative Gambit Lifts Voting Rights to 38.87% as Offer Lags Market Price

UniCredit's hostile bid for Commerzbank faces rejection as shares trade above offer price; Commerzbank highlights risks and strong turnaround plan.

The valuation gap at the heart of UniCredit’s hostile bid for Commerzbank is growing harder to ignore. The Italian lender is offering 0.485 of its own shares for each Commerzbank share – a package worth roughly 34.56 euros. But Commerzbank stock has been trading well above that level, closing Monday at 36.20 euros and slipping only marginally to 36.06 euros in the following session. With a year-to-date gain of around 41%, the market is effectively pricing the Frankfurt lender at a clear premium to what Milan is willing to pay.

UniCredit has responded by turning up the pressure through the derivatives market. A recent voting rights notification reveals that the Italian bank now has a direct and indirect claim on 38.87% of Commerzbank’s shares. Direct holdings remain steady at just under 27%, but the rest has been built up through financial instruments such as total return swaps, whose share has more than doubled to 12.10%. The move underscores UniCredit’s determination to pursue its offensive even as its public exchange offer struggles to win over free-float holders – in the first week, only a trickle of shares was tendered.

Commerzbank’s management and supervisory board are fighting back with a unanimous rejection of the proposal. Chief executive Bettina Orlopp has dismissed the offer as a “restructuring proposal” rather than a convincing merger of equals. The bank’s official stance warns that the synergies UniCredit expects are built on overly optimistic assumptions. In particular, a full integration could eliminate between 7,000 and 11,000 full-time jobs in Germany, a politically explosive figure that the Frankfurt-based lender is keen to highlight.

The list of strategic objections extends well beyond headcount. Commerzbank points to the sizeable holdings of Italian government bonds on UniCredit’s balance sheet and the Italian bank’s continued exposure to Russia as material risks. On top of that, the management argues that a large-scale IT integration could disrupt customer relationships, especially in Germany’s Mittelstand – a core segment where Commerzbank has long held a strong franchise. The offer, they say, contains no meaningful control premium and remains well below the average analyst price target of 41.50 euros.

To give shareholders a clear alternative, Commerzbank is leaning heavily on its own turnaround story. The bank posted an operating quarterly profit of 1.4 billion euros and has raised its full-year net income target to at least 3.4 billion euros. Under the “Momentum 2030” strategy, it aims for revenues of 16.8 billion euros and a net profit of 5.9 billion by the end of the decade. As a more immediate sweetener, the board has proposed a dividend of 1.10 euros per share for the 2024 financial year – a payout designed to lock in loyalty ahead of the AGM.

Technically, the stock looks stretched. The relative strength index has climbed to 81.2, well into overbought territory, which may limit further short-term upside. That technical froth does little to close the discount between UniCredit’s bid and the prevailing market price, and it has not helped the Italian bank attract meaningful acceptance from outside investors so far.

All eyes now turn to Wednesday’s annual general meeting in Wiesbaden, scheduled for 21 May. There, management will lay out its defence in full – hammering home the points of higher intrinsic value, the operational risks embedded in UniCredit’s own portfolio, and the credibility of the standalone plan. The dividend vote will serve as a key test of whether shareholders are willing to back Frankfurt over Milan, even as UniCredit continues to dial up the pressure through its derivative-driven stake.