Germany Considers Stricter Takeover Rules After UniCredit's Commerzbank Acquisition

Germany is considering a significant overhaul of its corporate takeover laws, prompted by UniCredit SpA's recent acquisition of Commerzbank AG, according to a Bloomberg report citing people familiar with the discussions.

Proposed Rule Changes

Lawmakers are reportedly focused on making it more difficult and costly for acquirers to gain majority control. Key proposals under review include:

• Forcing bidders to make a second mandatory offer once their stake surpasses the 50% threshold.
• Increasing disclosure requirements for buyers who use derivatives to build stakes.

Under current German law, a mandatory bid is only required once, when a holding reaches 30%. The addition of a 50% trigger would align Germany more closely with countries like Finland and make the path from a minority to a majority stake more expensive for potential buyers.

A spokesperson for the Federal Ministry of Finance confirmed that a review of the existing takeover law is underway but has not yet been completed, as reported by Bloomberg.

The UniCredit-Commerzbank Catalyst

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The review was triggered by the methods UniCredit employed to take control of Commerzbank. The Italian bank secretly accumulated a large position through derivatives before launching a takeover offer with a minimal premium, a move criticized by Berlin as “hostile, aggressive and opaque.”

The German government, which holds a 13% stake in Commerzbank from a financial crisis-era bailout, was caught off guard by the maneuver. Commerzbank CEO Bettina Orlopp has privately attributed the successful bid to German takeover law providing wide latitude for using derivatives to build stakes without early disclosure, the report said.

Historical Context and Market Impact

This is not the first time a controversial takeover attempt has spurred legal reform in Germany. In 2011, the government tightened disclosure rules for cash-settled derivatives after Porsche's attempted takeover of Volkswagen AG led to a massive short squeeze.

However, the 2011 changes focused on transparency and did not alter the 30% mandatory bid threshold. For investors and the M&A market, the introduction of a second bid trigger at 50% would represent a more fundamental shift, potentially increasing the complexity and cost of public takeovers in Europe's largest economy.