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Bank Austria deal okayed
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September 13, 2000: 7:56 a.m. ET
Austrian takeover commission clears HypoVereinsbank's proposal to merge
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LONDON (CNNfn) - Austria's takeover commission Wednesday cleared the way for Bank Austria AG to be bought in an agreed  7.4 billion ($6.42 billion) all-stock deal by Germany's HypoVereinsbank AG creating Europe's third-largest bank in terms of assets.
Bank Austria shareholders will decide whether to accept the German bid Sept. 27 at an extraordinary meeting. The Commission allowed the deal to go ahead because it ruled that Munich-based HypoVereinsbank was merging with, not taking over, Bank Austria.
 Bank Austria shares jumped more than 3 percent on the news. The gap between its price and that of HypoVereins, for which they will eventually be swapped one-for-one, narrowed to about 2.
"Not every takeover in the economic sense is also a takeover offer within the legal meaning of the takeover law," the commission said.
"Although in the normal economic sense the planned transaction is a friendly takeover of Bank Austria AG by HypoVereinsbank AG and the incorporation of BA as part of HVB, the transaction planned by HVB and BA does not represent a public takeover offer within the meaning of the takeover law."
No cash necessary
If the commission had ruled the deal a takeover in law, HypoVereins would have been obliged to make a cash offer to shareholders. Both banks ruled out a deal on those terms.
In a 23-page ruling, the commission said the deal did not constitute a takeover because no single party had a controlling interest in HypoVereins. The Bavarian bank's largest shareholder is insurance company Allianz AG, which holds 13.6 percent. A shareholding of 20 percent or more would have been classified as a controlling interest under the takeover law.
The panel said Bank Austria shareholders were being treated equally and their interests were adequately protected as they would have full voting rights in the new parent company, though it questioned whether a cash offer based on the average price of the past six months would have been more attractive.
Austrian law defines a takeover offer as a public offer to acquire some or all of the shares in a company for cash or in exchange for other securities.Under the proposed deal, Bank Austria will be incorporated into the Bavarian bank but will retain substantial autonomy, running the combined group's operations in central and eastern Europe under its own name.
Bank Austria shares, long seen as undervalued against their European peers, have surged since the deal was announced in July on expectations of substantial gains when they are eventually swapped one-for-one for HypoVereins (FHVM) shares.
On Wednesday, HypoVereins shares fell 1.25 at 64.85 by early afternoon in Frankfurt. Shares of Bank Austria (FBKA) gained 1.55 to 62.55. 
--from staff and wire reports
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