UniCredit has officially submitted its all-share bid for Banco BPM to Italian regulators, setting the stage for a potential €10 billion merger. CEO Andrea Orcel affirmed the adequacy of the offer price amidst investor speculation.
UniCredit’s formal filing solidifies its €10 billion ($10.5 billion) all-share offer for Banco BPM, initially announced on November 25th. This action establishes a price floor and initiates the regulatory approval process. However, Banco BPM’s closing share price on Friday significantly exceeded UniCredit’s implied offer price, suggesting market anticipation of a revised bid.
Orcel maintains that the initial offer, representing a 0.5% premium to BPM’s pre-bid share price, is “fair and appropriate.” He emphasized that any acquisition must generate shareholder value surpassing the returns of a UniCredit share buyback, targeting a minimum 15% return. While the current offer consists of 175 newly issued UniCredit shares for every 1,000 Banco BPM shares, Orcel previously hinted at the possibility of a future cash component.
UniCredit asserts that the deal offers a 15% premium based on Banco BPM’s share price before its November 6th bid for Anima Holding, a move that triggered share price increases for both companies. Orcel reiterated UniCredit’s commitment to a “disciplined approach to M&A,” requiring any transaction to demonstrate strategic alignment and meet or exceed financial performance metrics. He highlighted the superior resilience and diversification of UniCredit, along with its higher dividend yield, as benefits for Banco BPM investors.
The acquisition of Banco BPM has been a long-considered strategy for UniCredit. However, Orcel, a seasoned M&A expert, previously refrained from pursuing the deal due to the premium embedded in BPM’s share price. The current push for domestic consolidation in the Italian banking sector likely prompted the move.
A key element in the proposed merger is Credit Agricole (CA), a major shareholder in Banco BPM and a partner to both banks. UniCredit has initiated discussions with CA, likely centered on potential commercial partnerships. CA has strategically increased its stake in Banco BPM to 15% and applied to the European Central Bank for permission to hold up to 19.99%, strengthening its bargaining position. Orcel confirmed ongoing discussions with all relevant stakeholders. The successful completion of this merger hinges on regulatory approvals and negotiations with key stakeholders, particularly Credit Agricole. The market’s reaction suggests a potential need for UniCredit to sweeten the deal to gain broader investor support.
