Commerzbank formally rejected a takeover offer from Italy's UniCredit on Monday and advised its shareholders not to accept the exchange proposal [1].

The rejection marks a significant escalation in a struggle for control over one of Germany's largest lenders. A successful acquisition would shift the balance of power in European banking and potentially alter the strategic direction of the Frankfurt-based institution.

Commerzbank's Board of Managing Directors and Supervisory Board said the proposal does not reflect the fundamental value of the bank [3]. The board said the operation is vague and noted that it entails considerable risks [3]. According to the board, the offer valued the bank below its current market price [3].

UniCredit had disclosed a €35 billion offer to increase its stake in Commerzbank to more than 30% [4]. This move follows an earlier statement from UniCredit CEO Andrea Orcel, who said Sunday that the bank was pressing ahead with plans to take over its German rival [5].

In response to the bid, the Commerzbank CEO said the bank will continue to defend the interests of its shareholders [2]. The board's recommendation to shareholders serves as a formal barrier to the exchange offer, though the tension between the two entities remains high.

The conflict centers on whether the proposed price accurately captures the bank's assets, and future growth potential. Commerzbank officials said the Italian lender's approach is a low-ball proposal that ignores the bank's intrinsic worth [3].

“The operation does not reflect the fundamental value of Commerzbank, is vague and entails considerable risks.”

This rejection signals a defensive posture by Commerzbank against cross-border consolidation in the Eurozone. By labeling the €35 billion bid as an undervaluation, Commerzbank is not only protecting its current valuation but also potentially inviting a higher bid or signaling a preference for independence over an Italian-led merger.