Allianz fast-tracks Dresdner Bank sale

by David Masters

Story link: Allianz fast-tracks Dresdner Bank sale

The sale of Allianz-owned Dresdner Bank to rival Commerzbank has been fast-tracked after the latter offered to pay in cash because of its plummeting share price.

Both companies said the deal had been renegotiated following the impact of the credit crunch.

Commerzbank will now pay €5.1 billion (£4.2 billion) in cash, shares and asset swaps to Allianz for Dresdner Bank, significantly lower than the €9.8 billion shares-only deal originally negotiated in September.

This new agreement means that Commerzbank will not have to dilute shareholders’ interests by issuing more shares.

Commerzbank’s share price has spiralled downwards in recent months, losing around two thirds of its value as global financial turmoil has taken its toll.

This loss in value meant the shares that would have been given to Allianz in exchange for Dresdner bank would no longer have covered the sale price.

Last month Commerzbank received an €8.2 billion cash injection from the German government, money that will be used to help fund the Dresdner acquisition.

The new deal means that Commerzbank will complete the acquisition of Dresdner Bank in January, rather than at the end of 2009.

Allianz, who purchased Dresdner Bank for €14 billion in 2001, said the accelerated deal is beneficial for both parties given current market conditions.