UniCredit on Friday filed its buyout offer for rival Banco BPM BAMI.MI with Italy’s market regulator, and CEO Andrea Orcel said the price was adequate.
The filing makes the 10-billion-euro ($10.5 billion) all-share offer, which UniCredit announced on Nov. 25, binding and sets a price floor. UniCredit also applied to relevant authorities for regulatory approval.
Shares in Banco BPM closed at 7.846 euros on Friday, well above the 6.657 euros a share UniCredit is offering based on the bid’s exchange ratio, indicating investors are betting on an improvement of the proposal.
“We consider our initial offer to Banco BPM shareholders to be fair and appropriate,” Orcel said in a statement.
Any deal must create shareholder value and be superior to the return from any UniCredit share buyback, he said. An M&A veteran, Orcel has said he wants any deal to return at least 15%.
In announcing the for BPM, Orcel had signalled that UniCredit could consider topping it up with cash down the road.
“We remain committed to our disciplined approach to all M&A, with any transaction having to prove a strategic fit and meeting, or exceeding, our core financial metrics,” he said.
While BPM has long been a target for UniCredit, Orcel, who built his fortune as a bank merger adviser, resisted buying BPM until now in part because of the M&A premium built into BPM’s share price, sources previously told Reuters.
Accelerating domestic consolidation forced his hand.
Orcel said BPM investors would fare better holding UniCredit shares due to “its far greater resiliency and diversification going into a challenging year and two-times higher total distribution yield.”
UniCredit is offering 175 newly issued shares for every 1,000 BPM shares, a premium of just 0.5% to BPM share price prior to the bid.
UniCredit says the terms are a 15% premium to BPM’s share price before BPM bid for fund manager Anima Holding on Nov. 6, a move that triggered gains in the stocks of both Anima and BPM.
“Given the robustness of our approach, (the) premium put forward and the situation remaining the same to that existing at the time of our original offer, we are moving forward at such terms”, Orcel said.
UniCredit has also invited BPM’s biggest shareholder Credit Agricole (CA) to sit down for talks that are widely expected to focus on commercial partnerships.
CA partners with both BPM and UniCredit. To strengthen its negotiating position, CA has applied to the ECB to reach a 19.99% holding in BPM and used derivatives to raise its BPM stake to 15% from just below 10%.
“We are in continuous discussions with all relevant stakeholders,” Orcel said.
Source : Reuters
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