Court OK’s Commerzbank/Generali Deal

A German court cleared the way for Commerzbank to strengthen its cross holdings with Italy’s largest insurer, Assicurazioni Generali, by issuing additional shares, which will double its stake in Germany’s 4th largest bank to 10 percent.

The court found that a suit, brought by a shareholder, that sought to force the bank to recognize their preemptive rights, was found to be without merit. German law allows a company to issue shares selectively without offering them to other shareholders for up to 10 percent of its capital.

The decision clears the way for Generali to pay an estimated €600 million ($525 million) for the new shares and transfer its 1.8 percent stake in Spanish bank Banco Santander Central Hispano (BSCH) to Commerzbank.

For Generali the transaction insures its continued presence in the German market, its second largest after Italy, through its 67 percent interest in AMB Group, and “provides for an exclusive arrangement that will see the establishment of dedicated in-bank ‘insurance centres of competence’ throughout Commerzbank’s branch network,” said an announcement earlier this month.