Hypo Real Estate intends to acquire DEPFA (DE/IE)

The Boards of Hypo Real Estate Holding AG and of DEPFA BANK plc (DEPFA) have agreed unanimously to combine their businesses in an agreed transaction, and to jointly create one of the world's leading and focused provider of financing solutions for commercial real estate, the public sector and infrastructure projects.

For this purpose, Hypo Real Estate Holding AG intends to acquire all of DEPFA. The transaction, which would result in one of the largest German banks in terms of total assets and market capitalization, is valued at approx. €5.7 billion. Hypo Real Estate Holding AG will finance the acquisition by issuing new shares to the shareholders of DEPFA and also by way of a cash component. The transaction still has to be approved by the shareholders of DEPFA, and is also subject to regulatory approvals; it is expected to be completed by the beginning of October 2007.

The merger would result in a global player with a strategic focus which is unique in this form and with the following segments:

  • Commercial Real Estate Finance
  • Budget & Infrastructure Finance
  • Capital Markets and Asset Management (management of financing risks for third parties)

Excellent growth prospects
The new Group would have around 2,000 employees (combined figures for 2006). With total assets of approx. €385 billion and a market capitalization of more than €10 billion, the new entity would be one of the largest German banks. As of 31 December 2006, risk assets totalled approx. €100 billion, operating revenues approx. €1.96 billion and pre tax profit approx. €1.22 billion.

Structure of the new group
As a result of the acquisition, DEPFA would become a wholly-owned subsidiary of Hypo Real Estate Holding AG (in addition to the real estate financing subsidiaries Hypo Real Estate International AG and Hypo Real Estate Bank AG) and as such is to continue to exist with its excellent brand. The function of the Hypo Real Estate Holding as the central steering and management body of the group will not be changed. Nor are there any plans for the headquarter of DEPFA to be changed.

It is envisaged that the present-day DEPFA Group will become the center of competence for public finance and infrastructure financing as well as for Capital Markets and Asset Management of the Group. In a second stage, it is planned that Hypo Public Finance Bank puc in Dublin with its subsidiaries will be integrated in DEPFA.

On the other hand, DEPFA Deutsche Pfandbriefbank AG in Frankfurt/Main, at present a subsidiary of DEPFA, is to become a direct subsidiary of Hypo Real Estate Holding AG, and is to become responsible for German Pfandbrief business. In this connection, it is also to be responsible for the public finance portfolio of the German Hypo Real Estate companies (with a volume of approx. €45 bln).

The Commercial Real Estate segment is to be operated in the medium term from only one single legal entity based in Munich. This means that there are plans for only two Pfandbrief banks in Germany – instead of three at the moment.

Changes in the Management Board and Supervisory Board
It is planned that the Management Board of Hypo Real Estate Holding AG will be extended to include Mr. Cyril Dunne (47) and Mr. Bo Heide-Ottosen (48) after the transaction has been completed. They are currently members of the executive committee of DEPFA. The Management Board will then consist of Georg Funke (CEO), Cyril Dunne (COO), Dr. Markus Fell (CFO), Tom Glynn (Capital Markets/Asset Management), Dr. Robert Grassinger (Commercial Real Estate Funding und Treasury), Bo Heide-Ottosen (Budget and Infrastructure Finance with the corresponding funding), Frank Lamby (Commercial Real Estate Origination) and Bettina von Oesterreich (CRO).

Gerhard Bruckermann, currently Chairman & CEO of DEPFA, is to become the Deputy Chairman of the Supervisory Board of Hypo Real Estate Holding AG. There are plans that, on the occasion of the next annual general meeting, the Supervisory Board will be extended to incl

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