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German government makes bid for Hypo Real Estate

The German government today launched its long-awaited takeover approach for Munich-based property lender Hypo Real Estate. Private equity firm JC Flowers and private equity real estate firm Grove International have said they want to retain their minority shareholding.

Germany has made an offer to nationalize stricken Hypo Real Estate, the commercial property lender that has received tens of billions of euros from the state and German banks as well as other financial institutions.

The offer has been pitched at €1.39 a share, above the closing price of €1.20 in Frankfurt yesterday.

The government has already acquired around 8.7 percent of the company by acquiring €60 million worth of its shares. At the time of the deal last month, Hypo said it was “a prerequisite for the intended recapitalization of Hypo Real Estate” that the government “gain full control.”

US private equity firm JC Flowers, private equity real estate firm, Grove International, and Japan's Shinsei bank, own approximately 24 percent of Hypo having invested €1.1 billion in 2008.

The minority shareholders have already said they want to retain their stake.