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Commerzbank Drops to Two-Year Low Amid Plan to Sell Shares

Commerzbank Board Ready to Approve $7.5 Billion Share Sale
Commerzbank will offer 2.44 billion new shares at 2.18 euros apiece, the Frankfurt-based lender said yesterday. Photographer: Hannelore Foerster/Bloomberg

Commerzbank AG fell to the lowest price in more than two years in Frankfurt trading as Germany’s second-biggest bank said it plans to raise about 5.3 billion euros ($7.5 billion) selling new shares to help repay state aid.

Commerzbank will offer 2.44 billion new shares at 2.18 euros apiece, the Frankfurt-based lender said yesterday. That’s 45 percent below the stock’s closing price on May 20. Shareholders will be allowed to subscribe to 10 new shares for every 11 already held from May 24 to June 6, and the new shares are expected to trade on June 7. Commerzbank slid 5.3 percent to 3.74 euros, the lowest since March 2009.

“Although the discount of the new shares is higher than what we had originally expected we stick to our positive view,” Philipp Haessler, an analyst at Equinet AG in Frankfurt, wrote in a note to investors. “Once the capital increase is completed investors should start focusing again on the fundamentals.” Haessler has an “accumulate” rating on the stock with a price forecast of 3.95 euros.

Commerzbank Chief Executive Officer Martin Blessing announced plans in April to repay about 14.3 billion euros by June through the sale of new shares and use of excess reserves. Commerzbank received more than 18 billion euros from the German government after agreeing to acquire unprofitable competitor Dresdner Bank two weeks before the collapse of Lehman Brothers Holdings Inc.

Soffin Stake

The lender has said it’s seeking to raise a total of 11 billion euros, with 8.25 billion euros coming from investors and 2.75 billion euros from Germany’s bank-rescue fund Soffin, which will maintain its stake of 25 percent plus one share in the company. Soffin will spend about 1.3 billion euros on new shares, Commerzbank said yesterday.

The bank on April 14 said it raised 5.7 billion euros in the first step, helped by the sale of conditional mandatory exchangeable notes, leaving another 5.3 billion euros to be raised in the rights offer.

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