Aareal Bank buys rival Corealcredit for 342 million euros

FRANKFURT (Reuters) - German property lender Aareal Bank ARLG.DE said on Sunday it would buy rival Corealcredit Bank AG RWBG.UL from U.S. investor Lone Star for 342 million euros ($468 million) to bolster its commercial real estate mortgage business in its home market.

Aareal said the deal would top up its earnings per share immediately after completion of the transaction, expected during the first half of next year.

“We are further expanding our position as one of the leading providers of commercial property financing,” Aareal chief executive Wolf Schumacher said in a statement.

Aareal said the transaction would create value for its shareholders right from the start and added that the bank would stick to a plan to resume dividend payments for the 2013 financial year.

Aareal is paying far less than the book value of Corealcredit’s equity capital, what is left of total assets after deduction of debt, of 648 million euros as per June 30.

Corealcredit Bank was acquired by Lone Star at the end of 2005. The U.S. firm slimmed down the bank to focus on commercial property financing in Germany, returning it to profitability in 2007.

Corealcredit has total assets of 7.6 billion euros, which compares with Aareal’s 43 billion.

Corealcredit’s legal, tax and credit risks have been valued conservatively and comprehensively ring-fenced, the buyer said.

As early as February, people familiar with the matter had told Reuters that the deal was in the making.

($1 = 0.7315 euros)

Reporting by Ludwig Burger. Additional reporting by Alexandra Huebner.; Editing by Alison Williams and Jane Merriman