Postbank Investors May Get Windfall After Deutsche Bank Loss

Updated on
  • Cologne court rules 14 investors get 48 million euros combined
  • Shareholders argued lender must more than double 2010 payout

Deutsche Bank AG was ordered to pay 14 Postbank shareholders a total of 48 million euros ($57 million) in a ruling that could lead to billions more in compensation for investors who argue the lender short-changed them in a 2010 takeover.

The court in Cologne, Germany, on Friday backed the argument of shareholders who accepted the original offer, but dismissed suits by three other plaintiffs who hadn’t tendered their shares. The judges refused requests by those three shareholders and by Deutsche Bank to combine the cases under a special procedure used for group financial litigation, the tribunal’s spokeswoman Miriam Mueller said Friday.

Deutsche Bank spent more than 6 billion euros acquiring stakes in Postbank, reaching about 94 percent in 2012. Shareholders were paid 25 euros per share under the offer. The plaintiffs claimed they should have gotten 57.25 euros because Deutsche Bank should have made a compulsory offer under takeover rules at an earlier stage.

The court on Friday agreed with these arguments, saying the investors can claim the additional 32.25 euros per share, because Deutsche Bank had agreements with seller Deutsche Post AG that conferred factual control earlier, said Oliver Krauss, a lawyer for half a dozen investors. Other shareholders could still sue, he said, but face an end of the year deadline to preserve their claims because of time limitations. 

Quite a Risk

"It’s quite a risk for Deutsche Bank," Krauss said.

Postbank shares traded above 70 euros in early 2007, but had dropped to lower than 9 euros a share two years later.

At the time, Deutsche Bank acquired about 48 millions shares with its offer and if all the shareholders were successful, the total payout could reach 1.5 billion euros. Krauss, who claims the bank must also interest for about 9 years, assess the total risk at 3 billion euros.

Deutsche Bank said it will review the judgment and is likely to appeal. Whether other investors can still sue is far from clear and legally undecided, the lender said.

The court also struck down the decision to force out those shareholders who didn’t tender and then received 35.05 euros, Krauss said. They can claim the difference to 57.25 euros, according to the lawyer.

The acquisition helped Deutsche Bank diversify its funding mix by boosting consumer deposits after the global financial crisis. Chief Executive Officer John Cryan in March dropped his previous plan to sell Postbank. He instead decided to embark on a second attempt at integrating the business into the lender’s other German retail unit and it will soon announce additional details of its integration plan.

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