UniCredit plans unviable while Berlin retains stake, government sources say

By Christian Kraemer and Maria Martinez

BERLIN, June 22 (Reuters) - Any plans by UniCredit to take Commerzbank private would be very difficult to implement under the German lender's current structure, as a delisting or squeeze-out of shareholders is hardly possible while Germany retains its stake, government sources told Reuters on Monday.

"UniCredit management's current plans are not viable, particularly with regard to business with small and medium-sized companies," a government source said.

The Italian lender declined to comment.

UniCredit on Friday reported an uptick in Commerzbank shares tendered in its takeover bid, while the German bank once again called on investors to reject the offer, prolonging a months-long battle between the two lenders.

In a squeeze-out, the remaining shareholders are forced out of the company in exchange for mandatory compensation. In Germany, this is possible after a takeover if control of at least 90% of the shares is ensured.

After the squeeze-out, the sole owner can then govern the company more easily.

However, a company can also be taken off the stock exchange at any time by a management board resolution. In that case, minority shareholders can remain in the company, but can no longer trade their shares on the stock exchange.

The German government will continue to act in the interests of Commerzbank's employees, Germany's Mittelstand and Frankfurt as a financial centre, the sources said.

Although the German government will continue to push ahead with the European banking union, that does not mean that every takeover is welcome without restriction, the sources said.

"We firmly reject aggressive approaches," a source told Reuters.

(Reporting by Christian Kraemer and Maria Martinez, additional reporting by Valentina Za editing by Thomas Seythal)