German postal group Deutsche Post AG will offer shares in its Postbank subsidiary at between 31.50-36.50 euros, valuing Germany's biggest retail bank at up to the six billion euro ($7.3 billion) level it had hoped for.
The price range set by Deutsche Post on Sunday surprised analysts after it saw its chances of getting close to that figure dwindling in recent weeks following unfavourable investor response and the embarrassing leak of an internal document.
The memorandum from Deutsche Bank, co-leader of the initial public offering, valued the bank at as little as 4.4 billion euros.
Guido Hoymann, an analyst at private bank Metzler in Frankfurt, said the range looked high from an investors' point of view as it offered little upside if priced at the top of the range. But he said he was convinced the issue would go ahead.
"It certainly raises the question of whether it is attractive to subscribe to the share. On the other hand, the price range is fairly wide, which allows for a favourable valuation," said Hoymann, who has set the fair value for Postbank AG at 36 euros per share.
But Deutsche Post Chief Executive Klaus Zumwinkel said in a statement: "Based on the feedback we are convinced that we have now found the right price range."
Deutsche Post, controlled by the government, intends to sell just under half of its Postbank stake - equivalent to a total of one short of 82 million shares, which includes a greenshoe or over-allotment option of 8.2 million shares.
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