UniCredit SpA headquarters logo on Saturday, January 22, 2022 in Milan, Italy.
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Italian lender UniCredit on Monday proposed a takeover of domestic rival Banco BPM for about 10 billion euros ($10.5 billion), in a move separate from its pursuit of German bank Commerzbank.
If completed, the transaction will bring together two of Italy’s largest financial institutions. UniCredit said in a statement early Monday that it would offer 6.657 euros per share. This represents a slight premium to Friday’s closing price of 6.644 euros.
UniCredit said the all-share deal will allow the bank to “further strengthen its role as a leading pan-European banking group.”
UniCredit shares closed 4.8% lower on Monday, while Banco BPM closed 5.5% higher.
The news follows a flurry of mergers and acquisitions announced in the European banking sector this year. The industry has long been considered ripe for consolidation, with deep-pocketed UniCredit often cited as a potential acquisition target.
In September, UniCredit filed an application to increase its stake in German financial institution Commerzbank to about 21%, increasing its stake to a maximum of 29.9%. Earlier that month, the Italian bank acquired a 9% stake in Commerzbank, half of which was acquired from the German government.
The German government has not yet celebrated the possibility of consolidation, with Chancellor Olaf Scholz saying in late September comments reported by Reuters that “unfriendly attacks and hostile takeovers are not good for banks.” said.
Commerzbank’s largest shareholder, the Berlin government, has a 12% stake after bailing out the bank during the 2008 financial crisis and selling an initial 4.5% position in early September. Commerzbank shares ended the day down 5%.
“This is definitely a surprise,” Kian Abuhossein, JPMorgan’s head of European bank equity research and global IB coverage, told CNBC’s “Squawk Box Europe.”
“It is unlikely that he is [UniCredit CEO Andrea Orcel] Both transactions can be executed at the same time. So this probably sends a message that Commerzbank is a little more difficult than originally expected. ”
Meanwhile, earlier this month, Banco BPM itself made a bid for asset manager Anima in a €1.6 billion deal, and a few days later acquired a 5% stake in state-run Monte dei Paschi di Siena (MPS).
UniCredit announced on November 6 that its quarterly net profit rose 8% year-on-year to 2.5 billion euros ($2.25 billion), beating Reuters’ forecast of 2.27 billion euros. The company also raised its full-year net profit forecast to more than 9 billion euros, up from the previous forecast of 8.5 billion euros. The stock is up about 55% since the beginning of the year.
Abouhossein said that even if Commerzbank and Banco’s BPM trades were staggered by, say, nine months, this would still be an unrealistic trading period.
“From a regulatory perspective, the execution risks are significant and regulators also need to remember to consider factors such as the bank’s size, operational risk and management’s ability to integrate two banks at the same time,” he said. Ta. “So I think he is.” [Orcel] I’m a little risk averse on these trades. ”
—CNBC’s April Roach and Ruxandra Iordache contributed to this article.
Correction: This story has been updated to reflect the correct spelling of Banco BPM.
