BHF Bank Battle

Creating a Franco-German Banking Giant

BHF-ActionPress
BHF Bank is at the center of a major takeover battle.
  • Why it matters

    Why it matters

    BHF Bank was once a major name in German private banking, but repeated takeover battles have undermined it over the past few years.

  • Facts

    Facts

    • French bank Oddo & Cie has offered €5.75 per share to take over BHF Kleinwort Benson, above the €5.10 per share offer of Chinese investor Fosun.
    • Oddo & Cie already holds a 21.6 percent of the bank and says it already has commitments from two major investors that will bring its stake above 50 percent.
    • Fosun also owns around a fifth of BHF and has been battling for months to launch a hostile takeover of the German bank.
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    Audio

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French bank Oddo & Cie has made a rival bid worth €760 million, or $806 million, to buy German-British banking group BHF Kleinwort Benson, topping an offer from Chinese investor Fosun.

The offer from Paris-based Oddo, which already holds a 21.6-percent stake in BHF, had been considered for a number of months after Fosun’s own hostile bid was met with stiff resistance from some investors.

By entering the fray, Oddo hopes to create a Franco-German banking competitor for private banking clients in Europe and one of the largest asset managers on the continent.

“The alliance would be a milestone in the development of the group,” Oddo chief executive Phillippe Oddo said in a statement.

Fosun, which also owns around a fifth of BHF, offered in July to buy the Frankfurt-based bank for €5.10 per share or €675 million in total. Oddo’s bid is worth €5.75 per BHF share, compared with a closing price of €5.08 on Thursday. Regulators halted share trading on the Brussels Stock Exchange on Friday, pending Oddo’s offer.

“The alliance would be a milestone in the development of the group.”

Phillippe Oddo, Oddo chief executive

The Franklin Templeton Group, which holds 17.5 percent of BHF, and the company Aqton, a holding controlled by BMW heir Stefan Quandt that holds a 11.3-percent stake, have committed to sell their shares to Oddo, the French bank said.

If successful, it means Oddo would hold at least 50.4 percent of BHF’s shares, the company said.

“The Oddo Group sees in BHF-Bank AG the potential to combine together all of its activities in Germany while giving each of them a new dimension, thereby giving rise to a benchmark independent Franco-German player of the euro zone,” Oddo said in a statement.

BHF Bank, whose roots date back to 1854, focuses on German small and medium-sized companies, the so-called Mittelstand. It had €43.6 billion ($46.14 billion) worth of assets under management at the end of June and generated net banking income of €211 million ($223.3 million) in 2014.

Subsidiary Kleinwort Benson Investors, which is based in Dublin, Ireland, is an asset management group which had €6.9 billion in assets under management for institutional clients at the end of last year.

The bank was once one of the biggest powerhouses in Germany’s private banking world, but has struggled over the past decade with a myriad of takeovers and counter-takeovers by international investors.

The most recent battle has been between current owners led by Leonhard (Lenny) Fischer, chairman of BHF Kleinwort Benson, and the chairman of Chinese conglomerate Fosun International, Guo Guangchang, who has been trying hard to organize a hostile takeover of the bank.

Business at the bank has suffered amid the back-and-forth. Over the first six months, the bank booked an operating profit of €8 million, but lost money in the third quarter of this year. In the first nine months of 2015, the bank earned just €5.2 million.

 

Gilbert Kreijger and Christopher Cermak are correspondents for Handelsblatt Global Edition in Berlin. Michael Brächer is a banking correspondent for Handelsblatt in Frankfurt. To contact the authors: Kreijger@handelsblatt.com, cermak@handelsblatt.com and braecher@handelsblatt.com

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