THE GERMAN government plans to make an offer to acquire all the shares in Hypo Real Estate as an alternative to a controversial expropriation of investors in the stricken bank.
Shareholders in HRE, the biggest German casualty of the financial crisis, will be given the chance to sell their holdings at a maximum price of €1.62 a share.
The tender offer could be announced as early as next week by Soffin, the government’s bailout fund to co-ordinate banking rescues. By making the offer, Berlin hopes to show it is using all the tools at its disposal to take control of HRE before turning to expropriation, which is likely to attract legal challenges.
The tender offer is not expected to produce the complete take-up the government wants, because it is likely to be rejected by JC Flowers, the private equity fund that is the largest investor in HRE.
However it could mean the government getting enough shares to gain a majority at an extraordinary shareholder meeting and push through a large capital increase that would increase its stake.
If this failed, the government would use a new law allowing expropriation, which was approved yesterday by the upper house of parliament. – Copyright: The Financial Times Limited 2009
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