(Bloomberg) -- A Deutsche Bank AG attempt to settle with some Postbank shareholders ahead of a key ruling next week has been roundly rejected by a lawyer for the plaintiffs.
The lender offered a small group of shareholders, who have sued the bank for allegedly underpaying them in the acquisition of rival Postbank more than a decade ago, compensation of €36.50 ($40.07) a share, according to a lawyer representing investors. An appeals court will likely decide their case next Wednesday, and the ruling is expected to influence a large number of similar law suits that are still in lower courts.
The investors are understood to want at least €57.25 - the price the stock was trading at in 2008 when Deutsche Bank first bought shares of its then-competitor.
“This is a sham offer, it’s dead on arrival”, Jan Bayer, a lawyer for the plaintiffs, said about the offer, which was made on Thursday and is valid through Monday. “I don’t think it’s serious.”
A Deutsche Bank spokesman said that the lender continues to be in settlement discussions with various groups of plaintiffs, declining to comment further on the settlement offer. The proposal was reported by Reuters earlier.
Deutsche Bank in April set aside as much as €1.3 billion in legal provisions after the Cologne appeals court warned at it may rule against the bank in the long-standing dispute, pushing it into its first quarterly loss in four years and prompting it to hit pause on share buybacks.
The Wednesday court hearing relates to a small group of ex-shareholders, who are seeking a total of about €100 million, including interest payments. But the case will likely influence similar ones, for which Deutsche Bank has put aside another €1.2 billion. Deutsche has made a separate €31 euros a share offer for investors, whose cases are yet to be ruled in other courts.
The Postbank hangover is one of Deutsche Bank’s longest-running legal issues with claimants alleging that the lender was required to offer a higher price to shareholders in rival Postbank when it made a successful takeover bid in 2010. At the time, Deutsche Bank offered €25 euros per Postbank share, but claimants say it should have used the price the stock was trading at when it first bought into the competitor in 2008, which was €57.25. Some investors have sued for a compensation of up to €64.25 per share.
In July, Deutsche Bank said it will most likely refrain from a second share buyback this year, after suffering its first quarterly loss in four years tied to the Postbank litigation. In its annual report, the bank said the claims total about €700 million plus accrued interest of about €600 million.
At its April hearing, the court recommended that the parties should settle. Deutsche Bank’s Chief Financial Officer James von Moltke told journalist last month he doesn’t expect any settlement in the near future given “the complexities” of the legal issues.
The cases are: OLG Köln, 13 U 166/11 and 13 U 231/17.
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