Thwarted investor group launches renewed takeover bid for Aareal Bank

Just when you thought the long-running saga surrounding the takeover attempt by minority investors at Wiesbaden-based Aareal Bank was finally done and dusted - well, it looks like it's back on again.

The financial investor groups Advent and Centerbridge, who failed to secure a majority in February due to the resistance of several major shareholders, are now planning a renewed takeover bid for the commercial property financing bank. This time they feel sure that the previously reluctant major shareholders will lend support to their fresh bid of €33 per share, valuing the bank at nearly €2bn.

Back in early February, Advent, Centerbridge and the Canadian pension fund CPPIB failed in their joint takeover bid, despite raising their offer from €29 to €31 per share and lowering the threshold for a minimum acceptance to to 60%. Their opponents, the hedge funds Petrus Advisers and Teleios, not only refused the offer for their Aareal shares, but urged other shareholders to likewise reject the offer.

It now looks as if Advent and Centerbridge have reached an agreement with Petrus, Teleios and other major shareholders Vesa and Talomon, and in a statement say the consortium would accept the new offer with their total of 37% shareholding, or would sell them to the bidders outside the takeover offer. Aareal says the financial investors would accept a minimum acceptance threshold of no more than 60% this time around, meaning they would only have to win over a further 23% of the outstanding shares.

The same statement says that Petrus, Teleios, Vesa and Talomon are now keen to join Atlantic Bidco GmbH, the investor group around Advent and Centerbridge, and have agree to invest part of their sale proceeds in a long-term indirect shareholding of about 20% in the bidding group.

Aareal Bank says that the contribution from the four previously reluctant major shareholders is limited to "Exclusively non-voting shares", while "any direct influence of these investors on Aareal Bank group activities would thus be excluded". In any event, the bank's board has again given its green light for the bid to go ahead.

The offer of €33.00 per Aareal share would again include the bank's proposed dividend of €1.60 for the past full year. In any event, the agreements with existing shareholders should increase the odds for a new offer to be successful, making an approval by German regulator BaFin likely. The private equity investors require approval from Aareal’s corporate bodies as well as from BaFin to overcome the statutory one-year blocking period for a renewed bid.

Petrus, which holds a stake of 18% in Aareal through stocks and derivatives, had claimed in the previous unsuccessful bid which ended in February that the Aareal Bank software subsidiary Aareon was itself worth the entire value of the bid. In its view the division should have been sold or hived off separately - effectively leading to a break up of the bank, which the bank has always bitterly opposed.

The planned AGM on the 18th May has been postponed while the management and supervisory boards at the bank weigh up the new developments. The board said, however, that it expects operating profit to rise to as much as €250 million this year, up from €155 million in 2021.

It also announced the acquisition of payment service provider Collect Artificial Intelligence GmbH for an undisclosed sum, along with its full management team and 50 staff. The seller was Otto Group. Collect AI operates a software platform for interactive invoicing and collection.