German government in bid to buy Hypo Real Estate

The German Federal government is finally moving to fully nationalise struggling German real estate financier Hypo Real Estate. Soffin, the German bank stabilisation fund, confirmed on Thursday that it is making a voluntary public takeover offer for HRE at a price of EUR 1.39 per share.

This corresponds to a transaction volume of approximately EUR 290 mln for all outstanding HRE shares not yet owned by Soffin. The offer price represents a premium of approximately 10% to the statutory minimum offer price of EUR 1.26. Soffin said this provides an opportunity for HRE shareholders to sell their investment at an attractive price. Soffin indicated it aims to acquire 100% of the outstanding shares - but with no minimum acceptance level.

In the final quarter of 2008, HRE was saved from collapsing under the pressure of a credit squeeze by a EUR 50 bn public-private lifeline. Soffin said the bank's collapse would have had a major impact on the German financial market. The takeover offer, it said, was an important step towards stabilising the system.