Aareal Bank share plummets after failed takeover

The minimum acceptance threshold of 60 percent had not been reached, said their special purpose entity Atlantic BidCo on Friday evening after the stock exchange closed in Frankfurt. The offer has therefore expired and will be reversed. On Monday, Aareal Bank shares fell significantly compared to their XETRA closing price on Friday. The course fell temporarily by 5.76 percent to 27.48 euros. On Friday evening, the price fell even more sharply at times in the after-hours trading.

Aareal Bank shares shot up in October when talks with financial investors became known. From less than 24 euros it went up to 29.90 euros within one day. Investors who have held the paper for a year can still look forward to an increase of around EUR 8 per note even after the failed takeover. However, shareholders with an investment horizon of 5 years lost around 10 euros per share.

The CEO of Aareal Bank, Jochen Klsges, regretted the collapse of the deal. “We supported the offer because, strategically, it was in the best interest of the company and its stakeholders,” he said, according to a company statement. But now the bank wants to drive its own growth. The Management Board and Supervisory Board had previously recommended their shareholders to accept the bid.

Under pressure from investors, Advent and Centerbridge had previously increased their offer for Aareal Bank from EUR 29 to EUR 31 per share. In addition, they lowered the minimum acceptance threshold from 70 to 60 percent of the shares in mid-January. In the event of a successful takeover, Advent and Centerbridge wanted to invest heavily in Aareal Bank and its IT subsidiary Aareon, and also expand the lending business. In addition, all profits should remain in the group and no longer be distributed to the shareholders.

The company, which is listed in the SDAX small-cap index, now intends to concentrate on its medium-term strategy again. The top management wants to focus even more on growth in real estate financing. The portfolio volume is to be increased by EUR 1 billion annually over the next three years. By 2024, 33 billion euros should come together. “In the current environment, we have a good chance of taking on very profitable new business,” said CFO Marc He according to the announcement. In the past financial year, the management reached its goal of a portfolio volume of EUR 30 billion a year earlier than expected.

Meanwhile, other plans are envisaged for the IT subsidiary Aareon. In the future, the board of directors wants to spend more money on takeovers and shareholdings in order to boost the previous successful activities in this area. However, the top management did not name a specific sum.

In 2023, Aareal Bank aims to achieve consolidated operating profit of around EUR 300 million. Already in the current financial year, the value should grow to the pre-crisis level. In 2019, the operating result totaled 248 million euros.

The shareholders should now receive a dividend again after the burst deal. A second dividend tranche of EUR 1.10 per share is to be proposed at the forthcoming Annual General Meeting. Aareal Bank intends to present further details on the growth plans on February 24 when the business figures for 2021 are presented.

/ngu/la/he

WIESBADEN/FRANKFURT (dpa-AFX)

Image sources: Aareal Bank