UniCredit throws a curveball with a €10.5 billion BPM offer

UniCredit throws a curveball with a €10.5 billion BPM offer

UniCredit (BIT:CRDI) has launched a surprise €10.5 billion share offer for its domestic rival Banco BPM (BIT:BAMI), sparking political backlash and concerns about the impact on Italy’s broader banking strategy. The move could disrupt the government’s plans to consolidate Banco BPM with state firm Monte dei Paschi di Siena (MPS), creating a third major player in Italy’s banking sector alongside Intesa Sanpaolo and UniCredit itself.

UniCredit is Italy’s second largest bank, with a strong presence across Europe and offers retail, corporate and investment banking services. Banco BPM is Italy’s third largest lender, with deep roots in the country’s northern regions, particularly Lombardy, and a focus on retail banking and wealth management.

The offer, announced on Monday, values ​​Banco BPM shares at 6.657 euros each, just a 0.5% premium to the last closing price. UniCredit CEO Andrea Orcel positioned the offer as a response to growing consolidation within the Italian banking sector, following recent moves by Banco BPM to acquire a 5% stake in MPS and make an offer for the asset manager Anima Holding.

Italian Economy Minister Giancarlo Giorgetti warned that the government could invoke its “golden powers” to protect strategic assets, describing UniCredit’s offer as “communicated but not agreed with the government”. Giorgetti’s comments, combined with criticism from Deputy Prime Minister Matteo Salvini, highlight the political tensions surrounding the agreement. Salvini expressed skepticism about UniCredit’s change in strategy, saying: “I thought UniCredit wanted to grow in Germany. I don’t know why it changed its mind.”

Orcel highlighted that the proposed merger will generate 1.2 billion euros in annual synergies, including 900 million euros in cost savings and 300 million euros in revenue growth, while strengthening UniCredit’s presence in the rich Italian region of Lombardy. He defended the timing of the offer, saying: “We cannot remain absent [Italian banking consolidation].” Despite the political and regulatory challenges, Orcel reassured investors that the deal is in line with UniCredit’s financial objectives, including maintaining a CET1 capital ratio above 13% and the continued distribution of dividends.

UniCredit’s bid for Banco BPM comes as the bank strengthens its stake in Germany’s Commerzbank (ETR:CBKG), a controversial move facing resistance from Berlin. Orcel has insisted that the Banco BPM acquisition will not affect UniCredit’s strategy in Germany, but analysts have raised concerns about the feasibility of handling two significant transactions at the same time.

The offer must gain approval from Banco BPM’s board of directors, the European Central Bank and antitrust regulators, with UniCredit aiming to complete the merger by mid-2025. However, political tensions, regulatory scrutiny and competing interests could pose significant obstacles to the success of the deal.

Banco BPM shares rose 5.5% after the announcement, while UniCredit shares fell 4.8%, reflecting mixed investor sentiment about the proposed merger and its broader implications.

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