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BUSINESS

Commerzbank speeds Dresdner deal

Reassuring investors that its acquisition of crosstown rival Dresdner Bank wouldn’t be crushed by the financial crisis, Commerzbank on Friday said it would step up the purchase of an additional 40 percent Dresdner Bank stake and pay in cash rather than shares.

Commerzbank speeds Dresdner deal
Dresdner's new home. Photo: DPA

Commerzbank will now shell out €1.4 billion in cash for the remaining minority holding and move up the purchase to January from the final half of 2009. It’s currently working to complete the purchase of an initial 60 percent stake of Dresdner.

The bank in August said it would give insurance behemoth Allianz €1.6 billion in cash as well as its Cominvest retail trading unit and a 30 percent stake in itself in a two-tier buy of Dresdner. But the terms now call for Allianz to be left with €3 billion in cash and just an 18.4 perecent Commerzbank holding in addition to Cominvest.

Commerzbank will also only pay €250 million for bad Dresdner investments it won’t be taking in the deal, down from an earlier-agreed €975 million.

“Amid continued volatile financial markets, this move allows us complete operating flexibility,” said Commerzbank CEO Martin Blessing in a statement.

Investors had been concerned that a collapse of Commerzbank’s shares had put the acquisition in doubt. The stock has tumbled from about €20 at the start of August to a 52-week low Wednesday of €6.55. Investors Friday rejoiced at the announcement, pushing Commerzbank shares up 7.4 percent to €7.39.

By comparison, the benchmark DAX index was mostly unchanged. Allianz shares also leapt Friday, trading 6.5 percent higher at €65.70.

Allianz put Dresdner up for sale earlier this year after trying for seven years to make cross-selling of banking and insurance products profitable. Commerzbank apparently beat out a higher bid from China Development Bank, which would likely have met with resistance from Chancellor Angela Merkel’s government.

The deal is also part of a broader consolidation of Germany’s banking landscape where private lenders have trouble competing with a phalanx of cooperative and government-backed lenders. Deutsche Bank, the country’s biggest bank, is buying Deutsche Postbank in a three-step agreement announced just days after the Commerzbank/Dresdner deal.

BUSINESS

France’s EDF hails €10billion profit, despite huge UK nuclear charge

French energy giant EDF has unveiled net profit of €10billion and cut its massive debt by increasing nuclear production after problems forced some plants offline.

France's EDF hails €10billion profit, despite huge UK nuclear charge

EDF hailed an “exceptional” year after its loss of €17.9billion in 2022.

Sales slipped 2.6 percent to €139.7billion , but the group managed to slice debt by €10billion euros to €54.4billion.

EDF said however that it had booked a €12.9 billion depreciation linked to difficulties at its Hinkley Point nuclear plant in Britain.

The charge includes €11.2 billion for Hinkley Point assets and €1.7billion at its British subsidiary, EDF Energy, the group explained.

EDF announced last month a fresh delay and additional costs for the giant project hit by repeated cost overruns.

“The year was marked by many events, in particular by the recovery of production and the company’s mobilisation around production recovery,” CEO Luc Remont told reporters.

EDF put its strong showing down to a strong operational performance, notably a significant increase in nuclear generation in France at a time of historically high prices.

That followed a drop in nuclear output in France in 2022. The group had to deal with stress corrosion problems at some reactors while also facing government orders to limit price rises.

The French reactors last year produced around 320.4 TWh, in the upper range of expectations.

Nuclear production had slid back in 2022 to 279 TWh, its lowest level in three decades, because of the corrosion problems and maintenance changes after
the Covid-19 pandemic.

Hinkley Point C is one of a small number of European Pressurised Reactors (EPRs) worldwide, an EDF-led design that has been plagued by cost overruns
running into billions of euros and years of construction delays.

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