French banking group Credit Mutuel Alliance Federale is acquiring German lender Oldenburgische Landesbank (OLB), a surprising move given that the northern German bank had considered a stock market listing for several years.
The sale was announced by OLB and the German subsidiary of Credit Mutuel, Targo Deutschland. While financial terms were not disclosed, sources indicated that the valuation for OLB is close to 2 billion euros.
A direct sale to Credit Mutuel provides intrinsic value to OLB's shareholders and avoids the complexities associated with an IPO. This acquisition marks Credit Mutuel's largest since its 2008 purchase of Citibank Germany and enhances its presence in Europe’s largest economy.
Recently, OLB CEO Stefan Barth indicated that market conditions for an initial public offering were the strongest in years, which raised expectations for a possible listing soon.
In its statement about the deal, OLB noted that the merger with Targo would position it as the tenth-largest banking group in Germany by assets.
"This acquisition is a further fundamental strategic step by Crédit Mutuel Alliance Fédérale in the implementation of its strategic plan," Targo stated.
OLB's shareholders include Apollo Global Management, the Teacher Retirement System of Texas, and Grovepoint Investment Management.
Data from Deutsche Boerse reveals that only a few banks have gone public on Germany's main exchange in the past 25 years. One of the recent IPOs was the 2015 listing of property lender Deutsche Pfandbriefbank.
In light of a shaky IPO market, a planned IPO by a German generic drugmaker was canceled due to market volatility.
Rothschild & Cie advised Credit Mutuel, while JPMorgan provided guidance to OLB.