BA-CA share among the top performers in a good year for stock markets

2005 was a very good year for virtually all European share indices. The factors responsible for the – in many cases – very strong performance of equity markets in general, and the ATX stock market index in particular, are easily identified: valuations were low, companies had restructured their operations in the preceding years and adjusted their balance sheets, and shareholders were pleased with the increases in shareholder value. In Europe, the Vienna ATX index turned in an exceptionally strong performance, gaining 51% in 2005 over the previous year; it was outperformed only by Oslo’s All-Share-Index (+52%). Within the individual sectors (Stoxx), commodities and cyclical consumption performed particularly well with gains of 49.4% and 33.2%, respectively. Banks advanced by 21.1% compared with the preceding year.

In 2005, Bank Austria Creditanstalt shares again advanced strongly in this bullish environment; with gains of 41% their performance was well above the average recorded by bank shares as a whole. With a closing price of € 93.99 at the end of 2005, Bank Austria Creditanstalt’s market capitalisation surpassed € 13.8 bn.

BA-CA shares pursued an irregular pattern in 2005: after rising steadily in the first few months, the share price was driven by takeover speculation from 27 May. On 12 June, the Management Board and the Supervisory Board of HVB Group and the Board of Directors of UniCredit approved the combination of HVB Group and UniCredit. Thereafter, the price of BA-CA shares tracked the price movements of UniCredit shares in the ratio of 1 to 19.92, with the spread gradually narrowing.

After UniCredit’s shareholders overwhelmingly approved UniCredit’s plans at the extraordinary meeting of shareholders in Genoa on 29 July, UniCredit was in a position to launch public offers for the exchange of HVB shares and BA-CA shares at the end of August. 88.14% of shareholders of HypoVereinsbank had accepted UniCredit’s offer by 24 October, the end of the acceptance period. This figure increased to 93.93% after the acceptance period was extended.

UniCredit’s voluntary, public takeover offer was available to BA-CA shareholders from 29 August to 31 October. UniCredit offered shareholders 19.92 UniCredit shares for one BA-CA share, or alternatively an amount of € 79.60 per share as a cash offer. 15.6 million BA-CA shares, corresponding to 10.6% of Bank Austria Creditanstalt’s share capital, were tendered for exchange or for acceptance of UniCredit’s cash offer during the above period. After the exchange ratios were announced, the acceptance period was again extended for a further 10 trading days (7 to 18 November 2005). On 23 November, UniCredit announced that 17.45% of BA-CA shares, or 77.72% of the free float, had been exchanged.

The BA-CA share again moved towards a fundamental valuation after the transaction was closed, initially characterised by the share’s reduced liquidity and the lower weighting in the ATX index (the free float factor declined from 0.25 to 0.10). In the first weeks of trading in 2006 the Bank Austria Creditanstalt share passed the € 100 mark to reach a market capitalisation of over € 16 bn.