By Valentina Z and Giuseppe Fonte
MILAN (Reuters) – UniCredit CEO Andrea Orcell has been making plans to take over Banco BPM for years and was almost ready to pull the trigger, two sources close to the matter said.
But rather than being able to choose the right moment, UniCredit had to make a 10 billion euro bid when Italy’s third-largest lender made its M&A move, putting Orcell’s dealmaking reputation on the line.
UniCredit, which was already facing headwinds in its pursuit of Germany’s Commerzbank ( ETR: ), declined to comment.
BPM shares rose 12% in the week after it announced a 1.6 billion euro ($1.7 billion) bid to take control of fund manager Anima Holding and it bought 5% of Italy’s Monte dei Paschi di Siena (MPS).
That raised the prospect of a tie-up between BPM and MPS that would sideline Italy’s second-biggest bank in domestic M&A, forcing Orcel’s hand.
On 22 November, he told a conference in London that his pursuit of the Commerzbank had stalled and that he would await a new government in Berlin.
Just three days later, UniCredit notified Italy’s market regulator before trading opened that it had launched an all-share buyout offer to BPM shareholders.
Orcell has long coveted BPM’s position in Italy’s wealthy Lombardy region, where UniCredit is weak, but had insisted on an M&A premium in its shares, a person with knowledge of his thinking told Reuters. .
Now he was offering a 15% premium to BPM’s pre-Anima bid share price, but almost no premium over UniCredit’s pre-bid share price. BPM said it undervalued the bank and its shares rose about 15% to UniCredit’s offer price.
“UniCredit has opened up two fronts, both very complex. The market is clearly saying that the Banco BPM deal is not going to work at the price offered. As time goes on, the market’s asking price is more expensive. happens,” said the banking professor at Bocconi University. and SDA Bocconi Dean Stefano Caselli.
Orcel has indicated it may offer some cash to BPM shareholders and will sit down with ‘industrial’ investors, starting with French bank Crédit Agricole (OTC: ).
“With one of Europe’s best-known M&A bankers at the helm, UniCredit has to succeed on one of two fronts,” Caselli said: “This requires a bold top up of the offering. UniCredit has There is cash to pay and that’s it, walking away from both deals is not an option as things stand.
Out of favor
Members of Italy’s conservative government oppose Orcell’s proposal because it derails plans to join BPM with MPS to create a strong rival to UniCredit and market leader Intesa Sanpaolo (OTC: ).
Orcel has fallen out of favor in Rome after he snubbed an opportunity to buy MPS from the state in 2021, deeming the billions of euros insufficient to offset potential risks and the impact on UniCredit’s capital stock.
Meanwhile, BPM’s largest shareholder Crédit Agricole, which partners with both BPM and UniCredit to sell its products, strengthened its hand by increasing its BPM stake to 15% last week. It could raise that to 19.99% but has ruled out a full takeover and has Rome’s informal blessing, sources told Reuters.
The French bank became BPM’s largest shareholder in 2022 after rejecting UniCredit’s bid for BPM.
In a sign of possible disappointment, UniCredit’s chief spokesman on Saturday warned BPM investors against Crédit Agricole’s strategy in Italy or a BPM-MPS merger. The LinkedIn post was later truncated, with the address of BPM shareholders removed.
With Italian takeover rules limiting a company’s ability to thwart a bid, BPM is examining how much leeway it has.
Meanwhile, Orcel, which is sitting on 6.5 billion euros of excess cash, has options to convince BPM shareholders that their future is better with UniCredit.
But time may work against UniCredit, with a rising BPM share price putting pressure on Orcel’s promise to shareholders to ensure M&A deals return at least 15%.
Time may also play into Rome’s hands.
While the government has no authority to block the BPM bid, sources told Reuters that Orcel’s approval requirement under investment screening rules could require a longer wait, which would add more time to the process for UniCredit. will give
($1 = 0.9521 Euro)
