(updates to add comments on integration costs, name change)
MUNICH (Thomson Financial) - Hypo Real Estate Holdings AG said it agreed to buy Depfa Bank PLC in a deal valuing the Dublin-based public financing specialist at about 5.7 bln eur.
Hypo Real Estate is offering 6.80 eur and 0.189 new Hypo Real Estate shares for each Depfa share, valuing each share of Depfa at 16.14 eur.
The offer represents a 17 pct premium on Friday's closing share price, and a 19 pct premium on the one-month average share price before today's announcement.
Depfa's board of directors and management board recommend that shareholders accept Hypo Real Estate's offer.
The takeover will take place by way of a scheme-of-arrangement under Irish law, the Munich-based company said in a statement.
The acquisitions will have a positive impact on earnings per share in 2008 and will lead to a positive pretax contribution of about 40 mln eur in the first year after the deal closes.
Revenue synergies will reach more than 150 mln eur a year after 2010, for instance by cross-selling the two companies' products, Hypo Real Estate said.
Cost savings resulting from the combination will reach at least 60 mln eur, with 75 pct of savings expected in the second year after the deal closes.
Hypo Real Estate expects the integration costs for Depfa to come to 160 mln eur, chief financial officer Markus Fell said.
Chief executive officer Georg Funke said the bank is planning to change its name and will suggest this at its next annual general meeting.
To fund the purchase Hypo Real Estate will also increase its capital by about 50 pct by issuing 67 mln new shares, meaning some 58 pct of the purchase price will be covered by new equity.
The remaining share of the purchase price will be in cash, which Hypo Real Estate plans to raise through a 450 mln eur mandatory convertible bond with one year maturity.
Depfa's shareholders will vote on the planned merger in an extraordinary shareholders' meeting in September. Shareholders representing at least 75 pct of Depfa shares must approve the merger for it to go through.
Depfa Bank will remain based in Dublin, and the total number of employees of Depfa and Hypo Real Estate will remain the same, Hypo Real Estate said.
By 2010, net return-on-equity will reach more than 15 pct, it said.
Hypo Real Estate's net return-on-equity stood at 11.7 pct in the first-half of this year, while Depfa's return-on-equity was at 17.5 pct.
Hypo Real Estate said it does not expect to increase its dividend for this year from 2006's 1.50 eur a share, but said it still expects to reach a payout ratio of 40-50 pct by 2010.
Hypo Real Estate also, unexpectedly, published second-quarter figures, saying its net profit in the three months through June rose to 137 mln eur from 105 mln eur in the year-earlier period.
In the first half of the year, net profit was at 219 mln eur, compared with 185 mln eur. Including deferred tax expenses, net profit rose to 267 mln eur from 209 mln a year earlier.
Depfa Bank said its second-quarter net profit fell 10 pct to 126 mln eur on higher staff and administrative costs, pushing the bank's cost-income ratio put to 30.6 pct from 24.3 pct. judith.csaba@thomson.com mas/hjp/mas/ejp/mas/slj/mas/jlw/fj/mas/slj/jcs/jfr COPYRIGHT Copyright AFX News Limited 2007. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
© 2007 AFX News
