Hypo Real Estate to Buy
Dublin-Based Depfa Bank
by Ragnhild Kjetland
From The Wall Street Journal Online
July 25, 2007
Real-estate financing company Hypo Real Estate Holding AG agreed to acquire public-financing bank Depfa Bank PLC in a cash-and-stock deal valued at €5.7 billion ($7.9 billion).
The deal seeks to draw synergies from combining the German banking company's predominantly commercial real-estate business with Dublin-based Depfa Bank's public-financing business.
Depfa's business comprises budget financing, public infrastructure projects, advice on privatization of public services and debt restructuring to governments world-wide. The company, listed on both the Frankfurt and Dublin exchanges, moved its headquarters to Dublin from Germany in 2002 to enjoy tax benefits and a more flexible legal environment.
Hypo, which focuses on commercial real estate, seeks to broaden its public-finance business, which has long been dominated by a small number of players, such as Depfa and Dexia SA.
Depfa's board has recommended the offer to shareholders.
With the emerging market of public-private partnerships in infrastructure projects, many banks outside the public-finance sector have been trying to gain a foothold there.
Hypo Real Estate's chief executive, Georg Funke, said that the two businesses "complement each other perfectly," and that the combined entity will be able to handle larger and more complex financing with more attractive margins in all segments.
Hypo shares fell 6%, while Depfa shares were up 12%, both in Frankfurt trading.
Email your comments to rjeditor@dowjones.com.
