by Bloomberg 18
Feb 2020 by Sonia Sirletti
and Ross Larsen
Intesa Sanpaolo SpA launched one of the biggest
European banking deals since the financial crisis with an unsolicited 4.9
billion-euro (US$5.3 billion) bid for smaller rival Unione di Banche Italiane
SpA.
Shares in UBI failed to open in Milan after
rising in pre-market trading. Intesa was little changed on Tuesday following
news of the bid.
The all-share offer, announced late Monday, was
made without the knowledge of UBI Banca’s board, according to a person with
knowledge of the matter. The directors will meet as soon as Tuesday to discuss
the bid. A UBI representative declined to comment.
Large-scale consolidation in European banking
has stalled since the financial crisis despite the widely held view that
greater scale would make struggling lenders more competitive. Analysts have
been predicting mergers in Italy and elsewhere due to the pressure on bank
profits from low interest rates, regulatory costs and the need to invest in
technology.
Intesa said it expects to finalise the UBI
purchase this year and sees the deal boosting its earnings per share by 6% from
2019 levels.
Under the offer, UBI investors will get 17 new shares
of Intesa for every 10 UBI shares they hold. That values UBI at about 4.25
euros a share.
“The bid is very appealing for both ISP and UBI
shareholders, as it would create a massive player in Italy, especially in the
north, with very high efficiency levels and competitive product companies,”
said Stefano Girola, a portfolio manager at Alicanto Capital SGR in Milan. “I
think the announced synergies are just a starting point and more will come.”
Complete Surprise
The move appears to have taken UBI completely by
surprise. The Bergamo-based bank released its three-year strategic plan only
Monday. CEO Victor Massiah said the bank is pursuing a standalone strategy but
may consider merger opportunities going forward. The strategic plan involves
the elimination of 2,030 positions and the closure of 175 branches
through 2022.
Intesa seems to have prepared the move well in
advance; part of the deal involves it selling 400 to 500 branches to BPER Banca
that the two banks operate jointly. BPER will call an extraordinary meeting to
approve a 1 billion-euro rights issue to fund the transaction. The sale is
already fully underwritten by Mediobanca SpA.
Intesa’s move also includes a binding agreement
with insurer UnipolSai Assicurazioni, that provides for the disposal of
insurance activities. The agreements were made to “pre-emptively
address anti-trust issues,” the bank said.
The combined bank will hold savings of more than
1.1 trillion euros and revenue of 21 billion euros. UBI’s existing management
“may have significant prospects in the group that will be born from this
operation.” Intesa chief executive officer Carlo Messina said in a statement on
Tuesday.
Copyright Bloomberg News
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