(Bloomberg) — Denmark’s largest mortgage lender Nykredit Realkredit A/S agreed to buy competitor Spar Nord Bank A/S in the latest consolidation move in the Nordic financial industry.
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The deal values Spar Nord at about 24.7 billion kroner ($3.5 billion) based on a cash purchase price of 210 kroner a share, according to statements by the two banks on Tuesday. The acquisition is recommended by Spar Nord’s board.
The offer represents a premium of about 49% compared to Spar Nord’s closing share price on Monday. The stock advanced in line with the premium in Copenhagen on Tuesday, recording its biggest jump since at least 1991. That brings gains this year to more than 90%.
Mergers and acquisitions have recently picked up pace among Nordic banks. In 2022, Jyske Bank A/S kicked off a consolidation trend in Denmark’s financial sector, which is among the most fragmented in Europe, as it took over all of Svenska Handelsbanken AB’s Danish activities.
More recently, Saxo Bank A/S has put itself up for sale and Sydbank A/S in July acquired Coop Bank A/S, and in October, Norway’s DNB Bank ASA announced a plan to buy Sweden’s Carnegie Holding AB.
Nykredit, one of Europe’s largest issuers of covered mortgage bonds, has been seeking to expand its banking operations in its home country, where the traditional lending market is dominated by Danske Bank A/S. The takeover will combine Nykredit Bank, currently Denmark’s fourth-largest on lending volume, with sixth-ranked Spar Nord to create Denmark’s third-largest bank with a 13% market share.
It’s about adding scale for Nykredit, and will “lower the group’s reliance on income from its mortgage business,” analyst Sverre Holbek at Danske Bank said in a credit note. “Geographical diversification should also increase with Spar Nord being particularly strong in Northern Jutland.”
Still, “the purchase price seems quite high,” Holbek said, entailing “significant additional issuance” of bonds for the lender.
Since Nykredit first approached Spar Nord, “we have negotiated an attractive agreement, including a higher offer price and other conditions,” Spar Nord Chairman Kjeld Johannesen said in a statement, adding that “the offer underlines Spar Nord’s strong market position and good outlook in a changing Danish banking market.”
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Nykredit has been a major shareholder in Spar Nord since 2003 and currently holds just under a fifth of the share capital and voting rights. The lender expects to complete the offer in the first half of 2025.
Deal interest is also on the rise across Europe, with UniCredit SpA launching a takeover bid for Italy’s Banco BPM SpA and saying it’s considering an acquisition of Germany’s Commerzbank AG. Several senior bankers, including Danske Bank CEO Carsten Egeriis and the finance chiefs of ING Groep NV and Deutsche Bank AG, also said during the third-quarter earnings season that mergers are moving up their list of priorities again.
(Updates with details, analyst comments from third paragraph)
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Publish date : 2024-12-10 01:26:00
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