The move comes after the state had given Hypo $135.5 billion in guarantees, after which its financial performance did not improve. A potential government bid was first announced in January.
Hypo closed trading yesterday at 1.20 per share. The government's offer is a 15.8% premium over that price.
The firm is 25%-owned by US private-equity investor J.C. Flowers, whose firm J.C. Flowers & Co., is based in New York City. Flowers bought his stake in Hypo last June at 22.50 euros per share, close to its 52-week high of 24.31.
Hypo has been involved in a number of large US commercial real estate transactions. In September it closed a $130-million loan for the purchase of 681 Fifth Ave., in New York City, for Metropole Realty.
To read a full Reuters article on the Hypo takeover, click here.
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