Deutsche Bank and Deutsche Post adjust structure of Postbank contract

The improved transaction structure for Deutsche Bank’s acquisition of Deutsche Postbank AG shares is based on the previous purchase price.

Deutsche Bank AG and Deutsche Post AG have agreed on an improved transaction structure for Deutsche Bank’s acquisition of Deutsche Postbank AG shares based on the previous purchase price. The contract now comprises three tranches.

In return, Deutsche Post will receive the proceeds of the whole transaction on the day of the closing and thus three years earlier than expected. Both parties expect the transaction to close by 27 February 2009 at the latest, subject to the approval of the antitrust authorities. The cash value of the transaction is EUR 4.9 bn.

As a first step, Deutsche Bank plans to acquire 50 million Postbank shares – corresponding to a stake of 22.9% – in a non-cash capital increase of EUR 1.1 bn excluding subscription rights.

As a result, Deutsche Post will acquire a shareholding of approximately 8% in Deutsche Bank. Deutsche Post can dispose over half of this holding from the end of April 2009, the other half may be disposed of from mid-June. It has been agreed that mechanisms designed to avoid market disturbances will be applied to any such sales. During the interim a certain amount of hedging is permissible, and some measures are planned.

At the same time, Deutsche Bank will underwrite mandatory exchangeable bonds issued by Deutsche Post. After three years, these bonds – including interest payments accrued – will be exchanged for 60 million Postbank shares, or a 27.4% stake. The bonds are zero-coupon bonds with a 4% accrued interest per year. The cash value of the bonds at the time of the closing is anticipated to be approximately EUR 2.7 bn.

Put and call options remain in place for the remaining 26.4 million shares (or 12.1%). Deutsche Bank will pay a cash collateral for the options amounting to the cash value of EUR 1.1 bn at the time of the closing. The exercise periods are now set between the 36th and 48th month after closing.
Through the collateralization of the put option and the subscription to the mandatory exchangeable bonds, Deutsche Post will receive approximately EUR 3.8 bn in direct liquid funds, of which EUR 3.1 bn were received by Deutsche Post on 2 January 2009.

Through the collateralization of the put option and the subscription to the mandatory exchangeable bonds, Deutsche Post will receive approximately EUR 3.8 bn in direct liquid funds, of which EUR 3.1 bn were received by Deutsche Post on 2 January 2009.

Upon closing of the new structure Deutsche Bank’s Tier 1 capital consumption will be reduced to EUR 1.0 bn versus EUR 2.2 bn under the previous structure.

The value for each tranche of the transaction may be adjusted before closing.