Stocks

Italian lender UniCredit proposes $10.5 billion acquisition of rival Banco BPM

Pinterest LinkedIn Tumblr

UniCredit, Italy’s prominent lender, made a proposal on Monday to acquire its domestic competitor Banco BPM for approximately 10 billion euros ($10.5 billion).

The offer, separate from its ongoing pursuit of Germany’s Commerzbank, aims to combine two of Italy’s largest banking institutions.

UniCredit announced that it is offering 6.657 euros per share in an all-stock deal, representing a slight premium over Banco BPM’s closing price of 6.644 euros on Friday.

The bank emphasized that this acquisition would bolster UniCredit’s position as a leading pan-European banking group.

Following the announcement, UniCredit’s stock fell 1.7%, while Banco BPM’s shares surged by 5%.

Consolidation within the European banking sector

This deal is part of a broader trend of consolidation within the European banking sector, which has been ripe for mergers for years. UniCredit, with its strong financial position, has frequently been mentioned as a likely acquirer.

Earlier this year, UniCredit raised its stake in Commerzbank to around 21% and later sought approval to increase it to 29.9%.

In September, the Italian bank had acquired 9% of Commerzbank, half of which was purchased from the German government.

However, the German government has yet to approve a potential merger, with Chancellor Olaf Scholz voicing concerns over hostile takeovers in late September.

Commerzbank’s largest shareholder, the German government, holds a 12% stake after rescuing the bank during the 2008 financial crisis and reducing its position by 4.5% in early September. Shares of Commerzbank fell 6% on Monday following the news.

Kian Abouhossein, Head of European Bank Equity Research at JP Morgan, told CNBC’s “Squawk Box Europe” that it’s unlikely UniCredit CEO Andrea Orcel could pursue both deals simultaneously.

He speculated that the difficulties surrounding Commerzbank could complicate the deal more than originally anticipated.

Will Banco BPM agree?

Banco BPM, in the meantime, is also pursuing its expansion.

Earlier this month, the bank offered to acquire asset manager Anima for 1.6 billion euros and purchased a 5% stake in state-owned Monte dei Paschi di Siena (MPS).

On November 6, UniCredit reported an 8% year-on-year increase in its quarterly net profit, reaching 2.5 billion euros ($2.25 billion), surpassing analyst expectations.

The bank raised its full-year profit forecast to above 9 billion euros, up from a previous estimate of 8.5 billion euros. Its shares have risen 55% so far this year.

Abouhossein noted that even if the deals with Commerzbank and Banco BPM were spaced out by several months, it would still be challenging to execute both.

He added that regulatory hurdles and the complexity of managing two major acquisitions simultaneously pose significant risks.

The post Italian lender UniCredit proposes $10.5 billion acquisition of rival Banco BPM appeared first on Invezz