Hypo Real Estate's management and supervisory boards said on Tuesday that the offer presented last week by a group of investors led by JC Flowers is below the 'current intrinsic value' of the Munich-based bank. The investors offered to acquire up to 50 million shares, or about 25% of Hypo RE's share capital, at a price of EUR 22.50 per share. The offer was submitted via the investment vehicle HRE Investment Holding LP.
Hypo Real Estate's management and supervisory boards said on Tuesday that the offer presented last week by a group of investors led by JC Flowers is below the 'current intrinsic value' of the Munich-based bank. The investors offered to acquire up to 50 million shares, or about 25% of Hypo RE's share capital, at a price of EUR 22.50 per share. The offer was submitted via the investment vehicle HRE Investment Holding LP.
In a joint statement, the two boards of Germany's second-largest commercial property bank said they continue to welcome the participation of one or more investors in the group's share capital, which they say would result in 'stabilisation of its shareholder base'. However, the boards believe that the low offer price argues against acceptance of the offer.
Nonetheless, they decided to refrain from making a recommendation as to whether shareholders should accept or reject the offer. 'The offer may appear beneficial to the shareholders interested in realising capital gains in the short term, or avoiding potential capital losses. The assessment depends on the individual acquisition date and the shareholder's personal tax circumstances,' the boards said.
The offer price represents a 20% premium to the weighted three-month average share price. The bank's shares have plunged 40% to EUR 21.77 so far this year, making it the worst performing stock on Germany's benchmark DAX Index. The fall followed the announcement by the bank in January that it was writing down EUR 390mln of collateralised debt obligations because of the US subprime mortgage crisis.