Aareal Bank AG is open to beginning discussions with potential bidders for its software business Aareon AG, Reuters reported, citing people familiar with the matter.
The potential talks follow pressure on the bank from activist investor Teleios Capital Partners LLC to consider selling the business, according to the Oct. 23 report.
The German real estate lender has reportedly tapped Société Générale and Deutsche Bank to advise on the potential divestment but no formal sale process has been initiated yet, the sources said. They added that the lender would prefer selling a minority stake in the unit — considered a "key pillar" by Aareal's CEO Hermann Merkens — but could possibly off-load a majority stake valued between €500 million and €600 million.
However, Teleios believes investors would benefit more from a full sale — a full sale would value Aareon somewhere between €700 million and €1.0 billion, the report said.
The bank is "assessing all relevant options" and has no established preferences, according to Merkens.
Teleios recently hiked its shareholding in the bank to 4.47% and called for a strategic review of Aareon. The Swiss asset manager also threatened to call for an extraordinary general meeting and a special audit if its demands are not met, Reuters added.