Deutsche Bank AG and Deutsche Post AG have revised the terms of their contract for Deutsche Bank to purchase Deutsche Post’s subsidiary, Deutsche Postbank AG. Under the new agreement, Deutsche Bank will acquire 50 million Postbank shares (approximately 22.9% of the bank) in exchange for an 8% shareholder interest in Deutsche Bank valued at approximately €1.1 billion. In addition, Deutsche Bank will pay approximately €2.7 billion for Postbank issued bonds with a mandatory conversion after three years into Postbank common stock approximating a 27.4% stake in Postbank. Finally, Deutsche Bank will receive put and call options on the remaining Postbank shares owned by Deutsche Post, approximating 12.1% of the bank’s shares, and will post approximately €1.1 billion of cash collateral (representing the present value of the put option).

The companies have both acknowledged that the new structure will allow the transaction to proceed in a more capital-efficient manner for Deutsche Bank and allow Deutsche Post to receive its cash three years sooner than originally planned. The closing is expected to take place on or before February 27, 2009.

As a result of the transaction, Deutsche Post will become Deutsche Bank’s largest shareholder. Deutsche Post has agreed to certain lock-up restrictions under which it may dispose of up to 50% of the shares beginning in April and the remainder of its stake beginning in mid-June 2009.