Flowers Offers $1.7b for Hypo Real Stake

FRANKFURT (Reuters) – Private equity investor JC Flowers launched an offer at a 25 percent premium for a stake in German subprime-hit investment bank Hypo Real Estate (HRXG.DE: Quote, Profile, Research) worth 1.1 billion euros ($1.7 billion) on Friday.

JC Flowers, leading a group of investors, confirmed it would offer 22.50 euros a share for up to 24.9 percent of Hypo Real, pushing its stock up about 3 percent to near the offer price.

“The investors are mid-term oriented and focused to strengthen Hypo Real Estate,” JC Flowers said in a statement.

Hypo's stock price has been under pressure since it surprised investors with subprime-linked writedowns in January, and it sought a long-term shareholder to secure its future.

Germany has been one of the countries worst hit by the global credit crisis, which was triggered when defaults began rising on less creditworthy U.S. mortgages.

JC Flowers said it would support the company in its strategy to expand its position as a leading financial institution in commercial real estate and public sector financing and would encourage management to exploit future growth potential.

“This includes potential business expansion opportunities in German and international markets, including the Japanese market,” JC Flowers added.

One option was a cooperation with Shinsei Bank Ltd. (8303.T: Quote, Profile, Research) in commercial real estate and public sector financing in Japan.

The investor group would also seek “proportional representation” on Hypo Real's supervisory board following completion of the deal, JC Flowers added. 

FRANKFURT (Reuters) – Private equity investor JC Flowers launched an offer at a 25 percent premium for a stake in German subprime-hit investment bank Hypo Real Estate (HRXG.DE: Quote, Profile, Research) worth 1.1 billion euros ($1.7 billion) on Friday.

JC Flowers, leading a group of investors, confirmed it would offer 22.50 euros a share for up to 24.9 percent of Hypo Real, pushing its stock up about 3 percent to near the offer price.

“The investors are mid-term oriented and focused to strengthen Hypo Real Estate,” JC Flowers said in a statement.

Hypo's stock price has been under pressure since it surprised investors with subprime-linked writedowns in January, and it sought a long-term shareholder to secure its future.

Germany has been one of the countries worst hit by the global credit crisis, which was triggered when defaults began rising on less creditworthy U.S. mortgages.

JC Flowers said it would support the company in its strategy to expand its position as a leading financial institution in commercial real estate and public sector financing and would encourage management to exploit future growth potential.

“This includes potential business expansion opportunities in German and international markets, including the Japanese market,” JC Flowers added.

One option was a cooperation with Shinsei Bank Ltd. (8303.T: Quote, Profile, Research) in commercial real estate and public sector financing in Japan.

The investor group would also seek “proportional representation” on Hypo Real's supervisory board following completion of the deal, JC Flowers added.