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Marketplace Morning Report

Shareholders against Hypo takeover

Stephen Beard Apr 9, 2009
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Renita Jablonski: A German property lender, one of the country’s biggest banks, is seeing its shares up today about 15 percent. That’s because the German government’s trying to nationalize Hypo Real Estate. A pair of American private equity firms, though, are opposing the move. Stephen Beard has more.


Stephen Beard: For Germany this is unprecedented. The government in Berlin does not nationalize companies against the wishes of shareholders. But this is what is happening here — the government is insisting on buying out Hypo’s shareholders.

Two American investors say no. Private equity firms JC Flowers and Grove International hold between them a 21 percent stake, and they say they want to hang on to it.

Brooke Unger of the Economist magazine says the German Government claims nationalization is essential. Hypo is close to collapse, and that could have terrible consequences for the whole economy.

Brooke Unger: This bank, Hypo Real Estate, can’t be allowed to go down because it will bring the entire system down. They want to restructure it and they want to do it on their own terms, and they’re basically telling the shareholders that either they cooperate with that or the government’s going to take over.

The U.S. private equity firms say they’re considering a legal challenge.

In London, this is Stephen Beard for Marketplace.

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