In a bold bid to reshape the Italian banking landscape, UniCredit announced on Monday its intent to acquire domestic competitor Banco BPM in a transaction valued at approximately $10.5 billion. This move, described by the bank as independent of its ongoing efforts to deepen ties with German lender Commerzbank, aims to consolidate UniCredit’s position as a dominant force in Europe’s financial sector.
The proposed merger, if approved, would unite two of Italy’s largest banks. UniCredit disclosed that it had offered $7.02 per share for Banco BPM, a modest premium over the latter’s closing price of $7.01 on Friday. The transaction, structured as an all-stock deal, is part of UniCredit’s broader strategy to cement its role as a leading pan-European financial institution.
Monday’s market reaction was mixed: UniCredit shares dropped 4.8%, while Banco BPM saw a 5.5% rise.
This development is the latest in a wave of consolidation efforts within Europe’s banking industry, which has long been viewed as ripe for mergers. UniCredit, often considered a prime mover in the sector, has been particularly active. In September, the bank increased its stake in Commerzbank to 21% and filed for permission to boost its holding to nearly 30%. This followed a 9% initial stake purchase earlier in the month, half of which was acquired from the German government.
Despite reducing its holdings slightly, Berlin remains Commerzbank’s largest shareholder, retaining a 12% stake after its bailout of the bank during the 2008 financial crisis. Commerzbank shares dipped 5% on Monday.
Industry analysts weighed in on the developments. Kian Abouhossein, head of European bank equity research at JP Morgan, observed that handling two major deals simultaneously could prove challenging for UniCredit CEO Andrea Orcel. According to Abouhossein, the situation suggests that progress with Commerzbank may be encountering unforeseen hurdles.
In parallel, Banco BPM has been making its own strategic plays. Earlier this month, it submitted a $1.7 billion bid for asset manager Anima and acquired a 5% stake in the state-owned Monte dei Paschi di Siena.
UniCredit’s financial health appears robust, with its November 6 earnings report showing an 8% year-on-year increase in quarterly net profit to $2.25 billion. The bank also revised its full-year net profit guidance upward, forecasting over $9.49 billion, compared to an earlier estimate of $8.97 billion. Its shares have surged by 55% this year.
Even with a potential timeline that staggers the Commerzbank and Banco BPM acquisitions by several months, Abouhossein cautioned that regulatory scrutiny and execution risks could complicate the deals. He noted that regulators would closely examine the size and operational risks of the resulting entities, as well as UniCredit’s capacity to manage two major integrations. “Orcel seems to be hedging his bets,” Abouhossein concluded.
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