Deutsche Bank has proposed a settlement to shareholders who sued Germany’s largest bank for underpaying them for the acquisition of Postbank. Though the Deutsche deal for Postbank was rejected by the lawyer on Friday stating it was too low.
The lawyer, Jan Bayer, rejected the bank’s proposal as a “crackhead” offer that is “dead on arrival”. Jan Bayer representing plaintiffs in a long-running case against Deutsche Bank on Friday slammed a proposed settlement from the German lender Deutsche as a “late low ball” offer.
Deutsche Bank underpaid for acquisition
The crux of the challenge against Deutsche Bank is that it underpaid for its acquisition of German retail banking giant Postbank in the late 2000s.
Legal action over the multistage deal has been rumbling on since 2010. Claimants number in the hundreds in total, with various suits in process from both institutional and private investors.
Deutsche settlement offer for Postbank
Deutsche Bank on Thursday afternoon offered claimants a settlement of 36.50 euros ($40.12) per Postbank share, said Bayer. Claimants have until Monday to respond.
A hearing on the Postbank case is due to take place at the Higher Regional Court in Cologne, Germany, on Wednesday.
“This tactic (a late low ball roll-over offer) has been planned for months despite statements of the bank to the contrary and our warning months ago that it bears the risk of not working,” as per an email by Bayer.
As per Bayer the offer was subject to acceptance by all claimants, one of whom had already rejected it. This implies that the Deutsche and Postbank settlement deal is unlikely to go through, unless conditions change.
Deutsche low-ball offer
“The bank’s goal of avoiding the court decision on Wednesday is doomed, and any settlement seems remote,” Bayer said, adding that the timing of an “unannounced offer … in the middle of the holiday season” meant the law firm was not even certain it could contact all claimants by the deadline.
Bayer Krauss Hueber is representing around 50 predominantly institutional claimants in various proceedings surrounding the case, who Bayer said are making around 1 billion euros in claims.
As per Deutsche Bank spokesperson “As we’ve stated in the past, we are in settlement discussions with various groups of plaintiffs within the several Postbank takeover proceedings. We cannot comment further on the status of these talks.”
Effect of Postbank lawsuit on Deutsche Bank
The Postbank litigation has weighed on the recent performance of Germany’s biggest lender. In its second-quarter results published last month, Deutsche Bank reported a net loss attributable to shareholders for the first time in four years, largely due to a 1.3 billion euro provision it made for Postbank cases. Deutsche Bank shares tumbled on the news at the time, but are up nearly 12% in the year to date as of Friday, according to LSEG data.
Deutsche Bank on Postbank lawsuit
In a previous lengthy statement on the case released in April, Deutsche Bank said the assertion of plaintiffs that the bank was obligated to make a takeover offer at a higher price had been “successfully disputed” adding that the lender believed this claim was “invalid.”
The Higher Regional Court of Cologne in 2020 dismissed all claims in the proceedings, but this ruling was set aside by Germany’s Federal Court of Justice in 2022 and sent back to the Higher Regional Court for a new decision.
Postbank lawsuit hearing
The Cologne court is due to hold a hearing in the case next Wednesday and possibly make a ruling. It has urged Deutsche and the plaintiffs Postbank to work on a settlement.
Bayer said that he had forwarded the offer to his clients and advised them the offer was “way too low”. But Bayer said, “We recommended waiting for the court decision on Wednesday.”