German property lender Aareal Bank AG on Sunday said it would buy rival Corealcredit Bank AG from US investor Lone Star Funds for €342 million ($468 million). The acquisition aims to bolster its commercial real estate mortgage business in its home market.
According to Reuters, Aareal said that the deal would top its earnings per share immediately after completion of the transaction. It is expected to close during the first half of next year.
Aareal said that the Corealcredit buyout would create value for its shareholders from the start. The transaction will be funded from existing liquidity shares, the report said.
Aareal stated that the purchase price is far below the book value of Corealcredit's equity capital of €648 million as of June 30. This is partly to reflect the credit risks Corealcredit is exposed to, Reuters said.
Corealcredit was acquired by Lone Star at the end of 2005. The US private equity firm slimmed down the bank to focus on commercial property financing in Germany. Corealcredit has returned to profitability in 2007, the report said.
Corealcredit has €7.6 billion in assets under management, while Aareal has a total of €43 billion assets under management, wrote Reuters.
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